A trust is a legal document that, like a will, often contains your instructions for what you want to happen to your assets when you die. It can be an effective way to manage your assets during life, while providing a smooth transfer of wealth upon death. Unlike a will, a trust can avoid probate at death, can control many of your assets and can prevent the court from controlling your assets at incapacity, if your assets are actually in the trust.
There are many different types of trusts. Revocable trusts can be changed or terminated. Irrevocable trusts cannot be terminated. Living trusts are created while the person is alive. Testamentary trusts do not come into existence until a person has passed away. Some trusts hold cash, some hold real estate, some hold life insurance, and some hold a combination of assets. Some prevent beneficiaries from spending all the money. Some trusts allow the beneficiary to spend all the money, but only on appropriate things. Special needs trust are used to help disabled individuals obtain or maintain government benefits. Some help individuals become eligible for Veterans benefits or Medicaid. Any of these trusts can be part of your estate plan.
Once a trust is created, the next question becomes when to fund the trust. A trust can be funded immediately, or at a later time. Assets can be added to trusts all at once, or over time. Some trusts get split into several smaller trusts. Funding trusts requires meticulous attention to detail and thoroughness. Funding is accomplished by either putting the assets, such as a bank account or real estate, in the name of the trust. Or, you can name the trust as the beneficiary of things like life insurance, investment accounts, etc.
Once a trust has been set up there are several steps a trustee must take in order to fulfill his or her duties. Investment and management of trust assets, preparation of trust accountings and tax returns, and making distributions to beneficiaries are all duties of the trustee. Mistakes or omissions by a trustee can result in personal liability of the trustee. Our lawyers can serve as trustee, or we can help you fulfill your duties as trustee.