Everyone should have an estate plan. Even if you own absolutely nothing at all, you still need to have all the right documents in place in order to take ensure that you are taken care of by the people of your choice and that those people know what your wishes are. However, some people need more estate planning than other. People with businesses, real property and large amounts of assets generally require greater and more complicated forms of estate planning. This almost inevitably involves one of the most common forms of advanced planning: trusts.
A trust is a fiduciary relationship in which one party, known as the grantor or settlor, gives another party, the trustee, the right to hold title to property and assets for the benefit of a third party, the beneficiary. This is enshrined in a legal document that is often referred to as the declaration of trust or trust agreement. The trust agreement establishes how the trust is to be administered, how assets should be distributed and who is entitled to those assets. Trusts can either be revocable, alterable or canceleable by the grantor, or irrevocable, unable to modified or terminated without the permission of the beneficiary.
But what exactly do trusts do? The answer is that there is very little trusts cannot do. Trusts can be used to:
· Avoid having to go to probate after a person passes away
· Protect assets from creditors
· Provide dead hand control of assets
· Qualify individuals for government benefit programs
· Retain tax benefits between married individuals
· Pay out assets over a long period of time to beneficiaries
· Keep your assets private
This list is not exhaustive. Perhaps the most common trust is called a ‘revocable living trust.’ A revocable living trust is a type of trust that individuals use to avoid having to go through probate, the legal process after a person dies wherein an estate is opened and their assets are distributed according to their will. An alternative to probate is to establish a revocable living trust and title your assets in the name of the trust. While you are still living, you can freely move assets in and out of the trust’s name. After you pass away, the trust will become irrevocable and no longer able to be changed. Because your assets are in the name of the trust instead of your own personal name, the trust survives and becomes its own separate legal entity, able to administer and hold the assets even after you have passed away. Since there are no assets in your name, there is no need for probate.
Trusts can be useful in many situations and you may benefit from having one depending on your needs. Contact Steciuch Law at 219-476-3870 or at firstname.lastname@example.org for a free estate planning consultation and to discuss whether or not a trust may be useful for your estate plan.