In addition to Wills, preparing Trusts is also a large part of my practice. Trusts are extremely flexible tools that can accomplish many things Simple Wills cannot. For many clients, a Simple Will adequately achieves all of their objectives. For others, the many possible benefits of using a Trust make it a better fit. Using Trusts allows individuals and couples to have much more input in what will happen to their assets when they die. Living Trusts may be created, revised, revoked, and “funded” during a person’s lifetime. Testamentary Trusts are included in a person’s Will and are only created and funded after death.
At its root, a Trust involves placing one’s assets into the hands of another (a trustee or trustees) for the benefit of a specified person or persons (the beneficiary or beneficiaries). The trustee has a legal obligation to abide by the Trust’s terms and hold the Trust’s assets for the benefit of the Trust’s beneficiaries. The person who creates the Trust is often referred to as the “settlor” or “grantor.” The beneficiaries are usually specific people living at the time of a Trusts’ creation, but they might also be individuals who may come into being in the future, e.g., children, grandchildren etc.
Listed below are some of the benefits of creating Trusts:
• Ability to give assets to multiple persons as a group, and allow a trustee to distribute money over time in a way the trustee thinks is best for all involved, or alternatively direct the trustee to make very specific distributions
• Ability to ensure assets given to a person or group are used for a specific purpose, such as education, buying a home, starting a business, and raising children
• Ability to transfer assets to person with limited mental capacity in a manner that ensures funds are used prudently and wisely
• Ability to transfer assets to a minor in a manner that ensures funds are used wisely and are not controlled by a minor’s parent(s)—this is typically appealing if the surviving parent is likely to remarry
• Ability to transfer assets to a financially irresponsible person in a manner that ensures funds are not wasted and not subject to attack by that person’s creditors—often referred to as a "spendthrift" trust
• Ability to make a transfer of assets conditional on some specified one time event in an effort to influence behavior of others: e.g., settlor could provide that a child gets funds only if he or she obtains a college degree by age 25, otherwise the money goes to a charity
• Ability to make a transfer of assets conditional on the continuity of a certain relationship in an effort to influence behavior of others: e.g., settlor could provide that a child gets annual distributions of income and principal only for as long as he or she remains married to a particular person
• Minimize estate taxes through use of disclaimer / family trusts
• Because a Living Trust is created and funded during the grantor’s lifetime, a Living Trust eliminates the costs and delays associated with probate
• Achieves a degree of privacy unattainable with probate
• Eliminates the need for conservatorship in the event the settlor becomes incapacitate
An Irrevocable Trust is any Trust that does not permit the settlor or grantor to terminate the Trust. Irrevocable Trusts allow the grantor to “remove” an asset completely from his or her estate such that the grantor gives up control of the asset’s disposition. This is particularly useful when one wishes to insulate the asset from future estate taxes and creditor access. One of the most common types of Irrevocable Trusts is an “irrevocable life insurance trust” or an “ILIT.” An ILIT owns a life insurance policy on the grantor’s life for the benefit of the Trust’s beneficiaries. The grantor generally gifts the insurance premium monthly, semi-monthly, or annually. Upon the grantor’s death, the ILIT receives the insurance death benefit and holds the funds “in trust” for the Trust’s beneficiaries. This type of Trust is particularly appealing because it removes the insurance proceeds from the insured’s estate while also restricting the beneficiaries’ use of the funds.
The information contained on this website is provided solely as a summary of the services offered by my firm, and is not intended as legal advice. It consists of only a brief overview of the various services that I provide. Laws in the area of business and estate planning change frequently. Please do not rely on the information on this website for your business or estate planning needs. Each company, individual, couple, and family has unique needs. It is always advisable to consult an attorney when dealing with any of the issues discussed herein.