A Trust is a private legal document or agreement that you create. It is a separate legal entity, like a corporations, except the existence of a Trust is not of public record, so it's totally private.
The person who creates a Trust is referred to as a Settlor.
Trusts hold assets for you or for the benefit of others, who are referred to as Beneficiaries.
Assets inside a trust are managed by a Trustee who has legal responsibility for managing and overseeing trust proceeds in accordance with your wishes. The trust stipulates how your assets should be managed, and how, when and to whom your assets will be distributed.
There are only two types of trusts: (1) Testamentary Trusts; and (2) Living Trusts.
Many people think only the wealthy can benefit from trusts. But this is simply not true. Trusts are highly flexible and can provide for an almost unlimited combination of needs, circumstances and objectives.
Because they can be designed to satisfy such specific needs and circumstances, trusts can address the concerns and objectives of most people. These include:
Unlike wills, trusts can hide assets and their disposition from public scrutiny armed with information from a probate proceeding. For example, a competitor might be able to force the sale of the decedent’s business at a below-market price.
When highly appreciated assets are sold, a large chunk of the gain may go to taxes. A trust can shelter property from taxes on income and capital gain and thus avoid the tax bite.
Setting up a charitable remainder trust (CRT) provides the grantor with income for life and creates charitable tax deductions.
Trusts offer a method of providing regular income to dependents and the possibility of tax savings for you. They also offer control through the choice of mandatory or discretionary payments, as you may specify to suit the dependents' changing support, educational and medical needs.
In addition, trusts can provide for the orderly passage of one’s property without the expense, delay, or publicity of probate, and for professional investment management for family members who lack this skill.
A trust can provide a monthly check, freedom from making investment decisions and the burden of bookkeeping details. It can also provide for the management of financial affairs in the event of illness or incapacitation, and tax savings on future gifts to charity.
A trust can protect the interests of children from a previous marriage, and spare friends and family members from legal conflicts.
Trusts can ensure that children and others with special needs will have their financial concerns properly addressed.
Trusts ensure that their financial affairs will be handled properly. They also handle the obligation of naming a guardian or conservator to oversee these responsibilities.
A trust can provide a "significant other" with income for life while keeping assets in the grantor’s family. Upon the death of the loved one, assets can revert back to a family member or to a specific charity.
Trusts can manage the assets and oversee all responsibilities regarding record-keeping and tax preparation for those unwilling or incapable of handling their financial affairs.
Trusts are very useful estate planning tools. Whether you need a trust will depend on your particular circumstances, but we regularly utilize trusts to address the following concerns:
Whether you need a simple trust, or require higher level estate planning to attain more complicated goals, we provide comprehensive, experienced representation. Properly planning and protecting your estate is a necessary step to protect for your family or loved ones in the event of death or incapacity. If you have questions about Trusts, or any other estate planning topics, please contact our office to schedule a free consultation, or use the link below to schedule your Free 15-Minute Call with an Estate Planning Attorney.
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