Trusts
A Trust establishes a legal relationship by which one person (“Trustor”) transfers title of property to another person (“Trustee”), and the trustee administers and manages the property for the benefit of the persons designated by the Trustor (the “Beneficiaries”) pursuant to the provisions set forth in the trust agreement. A Trust can be a valuable tool in the estate planning process.
Is a Trust right for you?
Whether or not a Trust is right for you can only be answered with very careful forethought,
knowledge of purpose, and a full understanding of how a trust is managed.
Types of Trusts
The circumstances that may give rise to consideration of a trust are far more numerous than can be adequately covered in this website. The laws of trusts are vast and complex, and the consequences of establishing a trust can have unintended effects if not given very careful and knowledgeable thought. Consultation with an attorney who is knowledgeable in this area of law cannot be overemphasized.
Described below are some of the uses of trusts, as well as some of the basic definitions and types of trusts.
Various uses:
- Tax Planning
- Holding and managing properties in various states
- Protection of assets from personal liability
- Preventing a beneficiary’s interest in a trust from being seized by a beneficiary’s creditors
- Probate avoidance
- Protection from Will contests
- Postponement of distribution of assets
- Maintaining privacy of assets
- Insuring the passing of property to children of a prior marriage
- Long term care of pets
Types of Trusts:
Intervivos Trust
This is a trust that is established while the maker is alive.
Testamentary Trust
A trust that is established upon death, through a person’s Will.
Revocable Trust
This is established while the maker is alive and the maker retains the right to revoke or modify the trust during his/her lifetime. This type of trust is very common among married couples who want to provide long-term maintenance and support for the survivor while preserving assets for children of the current or former marriage.
Irrevocable Trust
This is established while the maker is alive and the maker transfers outright ownership of properties to the trust. This type of trust is common with long-term tax planning purposes. Usually, these involve Investment Trusts or Insurance Trusts.
Definitions:
Maker, Trustor or Settlor
The person who creates the trust. There can be more than one maker, trustor or settlor, such as husband and wife.
Trustee
The person who manages the assets of a trust. The maker, trustor or settlor can be a trustee.
Beneficiary
The person who benefits from the trust. The maker, trustor or settlor can be a trustee and also a beneficiary of a trust.