What is a Trust and Why Do I want one?
When discussing trusts with clients, it is important to draw out exactly what a trust is and how it can benefit its creator(s) [the Trustors] and the intended beneficiaries and trustees.
A trust allows a trustee to hold assets for the Trust beneficiaries. Much like a will, a trust lays out your desires in regards to the handling, use and distribution of your assets. But unlike a will, a trust is effective during the life of the Trustor. Further, unlike wills, trusts often times are able to bypass probate — the legal process of settling an estate during which the validity of the will is proven — and your assets can be distributed to your beneficiaries more quickly. Avoiding probate makes the affairs of the Trustor private, avoids the delays of legal probate proceedings and entails fewer legal fees.
Who can be Trustee?
When creating a trust, any competent adult may be named trustee. Usually you would name yourself and your spouse as the trustees, in order to retain full control over your property, however you have the option of choosing any other adult. After a trust is created, if you are ever unable to manage your property as trustee, your co-trustee or successor trustee will do this for you. If there are no individuals who you feel comfortable in allowing leverage over your property, you may name a professional fiduciary as your successor trustee.
What property should I Put into my Trust?
It is not necessary to greatly fund your trust at its creation. You have the option of creating a trust with as little as a dollar or as much as all of your assets combined. You may also specify in your will that your trust is not to be funded until your passing. Every trustee has his or her own needs and concerns and thus the appropriate choice should be made according to each individual client’s needs and desires. Furthermore, once the trust is created, it is not necessary to see a lawyer if your assets change. This means less additional work on your part and less spending.
Can I find a do-it-yourself Trust program on the internet and save the cost of a lawyer?
When creating a trust it is very important to see your lawyer. Poorly drafted trusts, not specifically designed for your circumstances and needs, may lead to disputes, adverse tax consequences and red tape all resulting in grater legal fees in the future. Having your trust drafted by an attorney will save you money and grief in the long run.
The specific cost of drafting a trust varies. Attorney rates, geographical areas, size of assets, etc., all factor in to the cost of creating a trust. There are also many different types of trust, each serving a different purpose. Trust formation may cost as little as a couple hundred dollars to several thousand dollars depending on the details of the trust and the client’s individual situation.
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