Everything You Should Know About Trusts
Trusts are an important estate planning tool that can provide legal protection for a person’s assets, as well as reduce or eliminate estate taxes and prevent the estate from ending up in probate. Many people believe that trusts are reserved for the very wealthy, but that is simply not true. A trust attorney can help you decide whether a trust is an appropriate estate planning tool for your situation.
In short, a trust is a fiduciary relationship between a trustor and a trustee, in which the trustor grants the trustee rights to hold title to property or assets. Often, the trustor and trustee are the same person. Ultimately, the trustee will be responsible for distributing the trustor’s assets according to his or her wishes at death.
There are several categories of trusts: living or testamentary, revocable (living) or irrevocable, testamentary, charitable, marital, bypass (credit shelter), and more. These categories of trusts each serve a specific purpose. Again, a trust attorney can help you determine which type of trust is best for your unique needs and wants.
Frequently Asked Questions About Trusts
If I already have a will, do I still need a trust?
While wills and trusts do share some common elements, they also each offer a unique set of benefits. They are not interchangeable! However, everyone’s situation is different, so talk to an estate planning attorney about whether a will, a trust, or both are right for you.
If I set up a trust, will my estate still go through probate?
No! This is one of the reasons why trusts are so attractive. Wills always need to be probated, while a trust is a separate legal entity altogether, so its assets are not subject to probate when the trustor passes away. This ensures the timely distribution of assets upon the passing of the trustor, and also ensures that assets are distributed according to his or her wishes.
Can I still control my assets if they are in a trust?
Revocable trusts allow you to maintain control of your assets; however, you may or may not have to relinquish some control of your assets when you set up an irrevocable trust. For example, while you generally cannot revoke an irrevocable trust, you may maintain the ability to change trustees, and add or withdraw assets from the trust.
Will my trust agreement become public knowledge after I pass?
No! Unlike wills which become public records, your trust agreement will remain private both while you are living, and after you pass.
Can creditors collect assets that are in a trust?
This is another reason why trusts are such a valuable estate planning tool. When assets are held in an irrevocable trust for your loved ones, often after your death, they become safe from creditors. Furthermore, leaving assets in a trust protects your loved ones from themselves, predators, and divorcing spouses.
How do I get started setting up a trust?
We encourage you to set up a consultation with trust attorney Tammi M. Caress, who will guide you through the estate planning and trust administration process. You may also take advantage of our free estate planning workshop to learn more about wills, trusts, and probate.
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Our Estate Planning Primer will introduce you to the various estate planning tools, explain what they do, and help you gain familiarity with the terminology and process.