It is understandable for people to avoid thinking about the future and what will happen to their property after they die. However, it is in the best interests of the estate owner as well as their survivors to prepare for the future. One estate-planning tool that accomplishes this is a trust. A trust can supplement a will, or it can completely replace it. The property owner is referred to as the trustor. In order to set aside money for another person (known as the beneficiary), they can legally hand over ownership of a portion of their property to be held in trust.
The organization or person that manages the money until it is given to the beneficiary is called the trustee. This is usually a paid role as they will have complete responsibility for the care and management of the funds, as well as successfully transfer it when the time comes. Sometimes difficult situations arise and the trustee is expected to act in the best interests of the beneficiary. In some cases, the grantor is also the trustee of the estate. Instead of legally transferring ownership, they retain ownership and act in a financial capacity for the beneficiary. In still other cases, the grantor names himself or herself as the beneficiary.
A trust can fall into one of two categories. A testamentary trust occurs when the funds are only legally transferred out of the grantors ownership when they pass on. Some choose to make this a part of their will as it adds control to how their money is dispersed. A living trust, or "inter vivos" trust, begins while the grantor is still living, but can continue on even after their death. By taking advantage of this tool, the trustor could avoid having their estate go into probate. Under the second category of living trusts, there are revocable and irrevocable trusts. A revocable trust is able to be revoked or altered at any time after the trust begins. An irrevocable trust cannot be changed in any way until the trust's purposes have been carried out.
Although there are many benefits to creating a trust, it may not be necessary in every case. The necessity of a living trust depends on the size of the estate, the individual's marital situation, and their age. In comparison to a will, creating a trust can be more time-consuming and expensive. It requires more work and upkeep and it is more complicated to change the terms of the trust.
Larger estates have more to lose should they be taken into probate court. For high-net worth estates or for those who own businesses that would be hurt by probate, a living trust would be a good option. Marital status also has an effect on the necessity of trust. If a couple knows that they want to leave their entire estate to the other spouse after death, a will is most likely sufficient. The last factor is age. If the property owner if under the age of fifty-five and there is nothing to suggest that they are in bad health, setting up a trust may not be necessary until later in life. Due to the amount of time, energy, and funds that must be put into creating a trust, waiting may be the best option.
As with other matters of law, every case is unique and there is no cookie-cutter answer. Allowing an experienced probate lawyer to examine your situation is highly recommended and may save you a considerable amount of time and hassle. Not only that, but you can have peace of mind knowing that your estate is taken care of and your loved ones are provided for.