A trust-based estate plan is desirable for many individuals. I am happy to sit down with you to determine if a trust is right for your circumstances. Many are unclear about what a trust really is. A trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a trust can avoid probate at death and is a more seamless and private method of distribution. A trust can be designed to achieve a wide range of goals. A trust can control your assets during your life or during the life of your beneficiaries and can provide asset protection from financial predators. Trusts can ensure that individuals do not inherit before they are fiscally disciplined, and can prevent a beneficiary’s spouse from receiving trust proceeds through a divorce. In some instances, trusts can result in significant tax savings.
Regardless of its specific function, every trust shares four components:
- The Grantor (Trustor/Settlor) who creates and funds the trust
- The Beneficiary(ies)
- The Trust itself
- The Trustee who manages the trust. In a revocable living trust, the grantor is also the trustee. Increasingly, a Trust Protector is named as well.
A trust can assume many forms. A trust can be “revocable,” meaning that it can be freely altered or dissolved during the life of the grantor, or “irrevocable,” which cannot be dissolved and therefore provides greater asset protection. A trust can be “living,” meaning that it is in effect during the life of the grantor, or “testamentary,” which does not go into effect until the death of the grantor. A testamentary trust can be a feature of a will, however, like the will, it would be subject to the probate process. Trusts can also facilitate eligibility planning for Medicaid, SSI and other government services through Special Needs Trusts, and can be designed to take care of the needs of pets.
As in a will-based plan, it is essential that a trust-based plan appoint a guardian for minor children and include a number of Medical & Financial Proxies, such as powers of attorney and a living will.