Trusts
There are a large variety of trusts, all of which can be customized to your unique needs. Trusts can be used to control the distribution of your assets for years following your death, to protect assets from creditors, to keep the distributions you wish to make on your death away from the public record, to avoid the need for guardianships over minor children and incapacitated adults under your care om your death, to manage your assets during your lifetime if you become incapacitated, to manage real estate used by multiple people and a host of additional purposes.
Using a trust as part of your estate plan involves thinking about the purposes for which you want the trust to be used, and then preparing a document that clearly and thoroughly explains the rules you wish to apply to the management of the Trust. Your Trust will need someone to put those instructions into effect. That person is called the "trustee." It is not uncommon for you to serve as the initial trustee of your own trust, and to then include a provision that appoints a successor trustee to take over those management duties once you are no longer able to do so by death or incapacity. A trustee can be a friend, family member, professional advisor, or even a for-hire service like a bank. Whoever you choose to serve as trustee must be someone you trust and who is capable of managing the assets held by the trust.
In addition to appointing a trustee to manage the trust, you will want to have a plan for how the trust will be funded. Some trusts are funded when they are created by retitling your assets (like bank accounts and real estate) into the name of your trust. Some trust are not funded until the occurrence of some future event - such as upon your death. A trust that is funded only upon your death often involves the creation of a pour-over Will in conjunction with the trust. The pour-over will is so named because it "pours" your estate assets into the Trust instead of to specific beneficiaries. Once your probate assets have been poured into the trust, the trustee can take over making the distributions you design the trust to make instead of having a court oversee that distribution process.
A revocable trust is a trust for which you retain the ability to revoke or cancel after it is formed. That means that if, after you draft and fund your trust, you wish to change it or get rid of it entirely, you retain the ability to do so. On the other hand, a irrevocable trust may not be revoked after it is formed except under very limited circumstances. Assets transferred into revocable trusts are generally treated as though the property continues to belong to you individually. Most revocable trusts are drafted so that upon your death or incapacity they become irrevocable. Property owned by a revocable trust that becomes irrevocable on your death does not go through the probate process. Trust property is used for the purposes designated in the trust until such time as the terms of the trust dictate that the last of the property should be distributed to your chosen devisees and the trust can terminate.
Property owned by a properly formed irrevocable trust is no longer treated as though it is your individual property, whether for tax purposes or for otherwise. Transferring property into an irrevocable trust is not a decision to be made lightly, as once property is placed into an irrevocable trust it cannot be returned to you. Nonetheless, an irrevocable trust can be drafted in such a way that you remain the trustee during your lifetime with the ability to use certain trust assets for designated purposes during your life.
Trusts are extremely varied, flexible, and powerful estate planning tools. It is impossible to accurately summarize their attributes briefly. After learning about your estate planning goals, personal and financial circumstances, the attorneys at Schulz Harrison, LLC can help you determine if a trust makes sense for you and if so, can draft a trust that helps accomplishes your particular goals.
Disclaimer: This summary is not intended to be comprehensive, and should not be construed as legal advice for your particular situation. Nothing in this website is intended to substitute for legal representation.