What is a Trust?
Trusts are an incredibly useful estate planning tool. Trusts allow for the transfer of title of property or assets of the settlor, the original owner of the assets. In a trust, the settlor will name a trustee, who manages the trust. The trust will also name one or more beneficiaries, the parties to receive the property in the trust.
Why create a Trust?
One benefit to trusts is that trusts are generally not subject to probate. Probate can be a long and expensive process, thus, using a trust, as opposed to some other estate planning tools, may save your estate and your beneficiaries time, money, and hassle. Another important benefit to a trust is that generally, your creditors cannot attach to the property held in your trust. Thus, if you are sued, the assets in the trust may not be subject to the lawsuit.
One important aspect of using a trust for your estate is making sure that you select the best type trust for your estate. Which trust is best for you is dependent on a number of factors, but mainly the wishes of the settlor. This is why it is important to have an attorney to create a trust for your estate.
Some examples of different types of trusts are:
- Revocable trusts
- Irrevocable trusts
- Charitable trust
- Constructive trusts
- Special Needs trusts
- Spendthrift trusts
- Tax By-Pass trusts
- Totten trusts
Each of the aforementioned trusts has its own pros and cons, so selecting the correct trust is crucial for successful management of your assets. The attorneys at Katz, Pryor, and DiCuccio, LLP are experienced in this area and can help you make the proper decision.
Steps to Creating a Trust:
Creating a trust is a two-step process. The first step is creating a trust agreement. This is a legal document in which the settlor designates the trustee and beneficiaries. It will describe how the settlor wishes to distribute and manage the assets. However, if the trust documents are not properly drafted, there are several legal issues that can otherwise disrupt the settlor’s wishes and effectiveness of the trust. it is important to have trust documents drafted by an attorney to ensure that problems do not arise. Once the trust agreement is created, the settlor must fund the trust. In this step, the settlor will transfer assets into the trust. The process for funding a trust varies depending on the asset being put into the trust and the type of trust.
Do you need a trust as part of your estate plan? Contact the experienced attorneys at Katz, Pryor & DiCuccio, LLP for a free consultation.