Trusts

A legal trust is a legal arrangement in which one party, the trustor or settlor, gives control of assets to another party, the trustee, for the benefit of a third party, the beneficiary. Trusts are commonly used as estate planning tools, but they can also be used for a variety of other purposes.

There are many different types of trusts, each with their own specific purposes and requirements. Some of the most common types of trusts include:

• Revocable trusts: A revocable trust is a trust that the trustor can modify or terminate at any time during their lifetime. Revocable trusts are often used as a way to avoid probate, since assets held in the trust are not subject to probate proceedings.
• Irrevocable trusts: An irrevocable trust is a trust that cannot be modified or terminated once it has been created. Irrevocable trusts are often used for estate planning purposes, since assets held in the trust are not subject to estate taxes.
• Living trusts: A living trust is a trust that is created during the trustor’s lifetime. Living trusts are often used as a way to avoid probate and to provide for the trustor’s care in the event of incapacity.
• Testamentary trusts: A testamentary trust is a trust that is created through the trustor’s will. Testamentary trusts are often used as a way to provide for minor children or other beneficiaries who may not be capable of managing their own finances.
• Charitable trusts: A charitable trust is a trust that is created for charitable purposes. Charitable trusts are often used as a way to provide for ongoing support for a specific charity or cause.

Creating a trust involves several important steps that an experienced attorney can help with. First, it’s important to identify the assets that will be placed in the trust. These assets can include cash, real estate, stocks, bonds, and other types of property. Once the assets have been identified, the trustor must draft a trust document that outlines the terms of the trust.

The trust document typically includes information about the trustor, the trustee, and the beneficiary. It also includes instructions for how the trust assets should be managed and distributed. In some cases, the trust document may include specific instructions for how the trust should be terminated or modified.

Once the trust document has been drafted, it must be signed and notarized in accordance with state law. An experienced attorney can ensure this process is followed correctly. The trustor must then transfer the assets into the trust, either by re-titling them in the name of the trust or by assigning them to the trust.

One of the main benefits of creating a trust is that it allows the trustor to maintain control over their assets even after they have been transferred into the trust. For example, if the trustor creates a revocable trust, they can still manage and control the assets held in the trust during their lifetime. Once the trustor passes away, however, control of the assets is transferred to the trustee.

Another benefit of creating a trust is that it can help to avoid probate. When assets are held in a trust, they are not subject to probate proceedings, which can be time-consuming and expensive. By avoiding probate, the trustor’s assets can be distributed more quickly and efficiently to the beneficiaries.

Trusts can also provide significant tax benefits. For example, assets held in an irrevocable trust are not subject to estate taxes, which can result in significant tax savings for the trustor’s heirs.

It’s important to note that creating a trust can be a complex process that requires careful planning and attention to detail and is best done with a licensed attorney. Trusts must be created in accordance with state law, and any mistakes or oversights in the trust document can have serious consequences.