Many people have heard about “trusts” and wonder whether they should have a trust as part of their estate plan. There are different types of trusts, and different uses for trusts. A trust may be revocable or irrevocable. It may be created and funded during an individual’s lifetime, or in the alternative it may be included in a Will (a testamentary trust) and not take effect until the individual’s death.
When it comes to utilizing a trust as part of one’s estate plan, it is important to remember that there is not a “one size fits all” estate plan. For some a trust will be a key component of their estate plan, while others will prefer non-trust estate planning options. To decide whether a trust is right for you, it is important to know what a trust is and what it would accomplish, if created and made a part of your plan.
Revocable Living Trusts are the most common type of trusts that individuals will consider incorporating into their estate plan. A Revocable Living Trust is a legal document that holds the legal title, or in other words ownership of an individual’s assets, which are transferred to the trust, during the individual’s lifetime. An individual who creates a trust is commonly referred to as the settlor of the trust. Revocable Living Trusts typically provide both a medium for managing trust assets during the settlor’s lifetime, as well as specific directions regarding the disposition of the remaining trust property that is to take effect after the settlor’s death. The lifetime beneficiary of a Revocable Living Trust is usually the settlor. Likewise, the settlor frequently serves as the initial trustee of the trust. The settlor will typically serve as the trustee, until either his/her incapacity or death, at which time the successor trustee will begin to serve. This type of trust is frequently utilized by persons who would like to minimize the likelihood that, upon their death, their estate will have to be probated. With proper planning, funding, and management of the trust assets, a Revocable Living Trust can be a key component of an individual’s estate plan.
Again, it is important to remember that there are various types of trusts and reasons for creating trusts. For some, considering whether to create a trust as part of their estate plan, to minimize the likelihood that probate will be necessary, will be what is important to them. Others, however, will be considering whether to create a trust to achieve other goals, such as: to protect assets for a disabled loved one via a special needs trust; for long-term care planning purposes; for tax planning purposes; etc. Our law firm is committed to helping clients determine whether a Revocable Living Trust, or other type of trust, is appropriate for their specific needs and planning goals.
For more information regarding trusts, please contact the Elder Law Center, P.C. division of our law firm.