An Overview on Trusts Law

Benefits and drawbacks when property is held for the benefit of another

An estate plan helps you be confident your family will be taken care of after you die. One element of an estate plan is a trust—either one that transfers property while you’re alive or one that comes into existence after you pass. A trust gives you reassurance that property will be managed according to your wishes, and it can help your loved ones avoid the lengthy and costly court proceedings that can accompany the inheritance process.

This overview will help you understand the basics of creating a trust as well the benefits and drawbacks to this form of estate planning. You can use this information to help you evaluate your options as you consider your assets and how you would like them to be managed when you die.

Overview

A trust exists where property is held by one party for the benefit of another. These relationships typically include three people: the person making the grant of property (trustor), the person holding the property (trustee) and the person benefitting from the trust (beneficiary).

A trust can be a standalone grant of property or money that becomes effective immediately. This is called a living trust. A trust can be included in a will as a testamentary trust that will be created upon the death of the testator.

Creating a Trust

To create a trust, you will transfer legal ownership of property to a person or institution who will manage the property for the benefit of a person of your choosing. You can transfer the property to an institution like a bank, a family member or yourself. The party is then called the trustee.

This transfer creates a fiduciary relationship, which requires the trustee to act in the best interests of the beneficiary. This responsibility exists regardless of whether you make yourself or a third party the trustee, and the beneficiary can hold the trustee legally responsible if there are damages to their interest.

You will also need to decide whether you want to create a testamentary trust or a living trust. A testamentary trust is usually included in a will and doesn’t come into existence until your death. At that time, the trustee will follow the instructions in your will. You can create conditions that must be met before the beneficiary receives the benefits of the trusts or a schedule for payment of benefits. A living trust is effective immediately, and it may continue after your death. You can usually specify whether the trust is revocable, which allows you as the testator to change the terms or revoke it at any time.

Benefits and Drawbacks

Living trusts may be able to help your beneficiaries avoid probate, which can help them save time and money because they will not have to go to court for the property to be distributed. This is because the assets were transferred when you were still alive and do not count as your assets when you die.

Trusts, however, can be difficult to set up. Not only do they generally cost more money to establish than wills do, but they are also easy to get wrong. If you do not properly transfer title of your assets during your life, the property will still need to go through probate. This can cost your surviving family members the time and expense you were hoping they would avoid through use of a trust.

Common Questions

Below are some common questions you might want to consider when meeting with an attorney for the first time.

  1. Who owns the property in a trust?
  2. How does a trust work?
  3. Can a trustee withdraw money from a trust?
  4. What are the pros and cons of a trust?
  5. How do I create a trust?

Finding the Right Attorney for Your Needs

It is important to approach the right type of attorney—someone who can help you through your entire case. To do so, you can visit the Super Lawyers directory, and use the search box to find a lawyer based on your legal issue or location.

To help you get started, you may want to consider looking for an estate lawyer with experience creating trusts.

Why Should I Talk to a Lawyer?

An experienced lawyer can help you create an estate plan in line with state law so it will be able to stand up to any potential legal scrutiny and successfully avoid the probate process. Your lawyer will help you evaluate what kind of trust is best for you and your assets. Your lawyer will also be able to help your trustee understand their role, and they can provide relevant legal advice so that your wishes are honored. You can even appoint your lawyer as your trustee.

A lawyer will be able to anticipate potential problems with your estate plan and advise you on how to approach them. Your lawyer will also keep track of deadlines and file all the paperwork with the necessary courts and agencies, giving you one less thing to worry about.

Why Super Lawyers?

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations and peer evaluations. The objective is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel. As Super Lawyers is intended to be used as an aid in selecting a lawyer, we limit the lawyer ratings to those who can be hired and retained by the public. You can learn more about the selection process here.

Other Featured Articles

Estate Planning & Probate Icon Estate Planning & Probate

When to Consider Living Will and Medical Directive in Nebraska

The circumstances in which these estate planning tools can help

Estate Planning & Probate Icon Estate Planning & Probate

Do You Need a Will if You Do Not Have Kids?

Without a will, your wealth might end up with those who don’t need it

Estate Planning & Probate Icon Estate Planning & Probate

Things to Know When Considering a Cabin Trust in Minnesota

When is a cabin trust a good idea, and when should you choose another route?

View More Estate Planning & Probate Articles »

Page Generated: 0.16224598884583 sec