Living trusts can be an important part of your estate planning process, and they are simple to set-up.
What is a Trust?
A trust is a way to hold and manage property, in which the individual creating the trust (known as the grantor) transfers property to a trustee, that manages the property for the benefit of other individuals (known as beneficiaries). A trust is utilized as an element of an extensive estate plan, alongside with other documentation like a will, power of attorney, and/or healthcare power of attorney. For a better understanding of trusts, it helps to know a couple of primary terms:
- Living trust – Is a trust that is set-up in which the grantor is still living (also called an inter vivos trust).
- Testamentary trust – Is a trust set-up by the grantor’s last will and testament.
- Revocable trust – Is a living trust the grantor may alter or terminate at any time.
- Irrevocable trust – Is a living trust that the grantor cannot alter or terminate.
- Trust agreement – Is legal documentation that sets up a trust. It is occasionally known as a Declaration of Trust; nevertheless, the title on the document could simply read “The Polach Family Trust,” or something likewise. It establishes the names of the grantor, the trustee, and the beneficiaries. It additionally declares how the trustee should allocate the income from trust assets whereas the grantor is alive, and the way the assets or income needs to be allocated to the beneficiaries following the grantor’s passing.
The Reason to Set Up a Trust
Trusts are set up to achieve specific benefits that cannot be achieved using a will. These can comprise of:
- Bypassing probate
- Avoiding or putting off taxes
- Safeguarding your assets from creditors including you and your beneficiaries
- Retaining privacy concerning your assets
- Exercising greater management over your assets than could be achieved using a conventional will
- Enabling you to qualify for specific benefits, like Medicaid for long term care
- Offering financial support for an individual with a disability, at the same time enabling the individual to receive government disability benefits
When you are wanting to achieve one or more of these goals, you need to think about setting up a trust.
Do You Need a Will or a Living Trust?
Wills and living trusts do not serve same purpose. Subject to your situation, you might only require a will. But if you decide that you require a living trust, you are also going to need a will. It’s vital to know which choice is best for you.
How to Set Up a Trust
Setting up a trust is a 2-step approach:
Devising the Trust Agreement
The grantor devises a trust agreement, in which is a legal document that names the grantor, the trustee, and the beneficiaries, and details how the trust assets are to be administered and allocated. A portion of this step is choosing who you want to appoint as beneficiaries, how you are wanting the trust income and assets allocated to them, and who you want to appoint as trustee and/or trustees.
Funding the Trust
The second step, known as funding the trust, is the grantor transferring assets to the trust. The trust agreement is useless without it being funded. How this is accomplished is subject upon the nature of the property: Real estate. To allocate real estate, the grantor implements a deed that transfers the title to the property into the trust. Personal belongings with a title document. Many assets, like vehicles, boats, recreational vehicles, airplanes, and mobile homes have some kind of title documentation, that can be transferred to the trust. This may additionally be done with stocks and bonds. Other personal property. All other property not have a title document may be transferred by just writing details of the property on a piece of paper (like “each of my household goods,” or “my stamp collection”), and writing a note that it is going to be transferred to the trust.
How Long Does It Takes to Set Up a Trust?
Generally, it is feasible to set up a functional trust in a couple days to a few of weeks. When an attorney creates your trust, the time is going to differ subject to how fast you can schedule an appointment, how fast you can get the needed information submitted, and how long it will take the attorney to create the trust agreement and take any actions required to fund the trust. When you create your own trust, the time is also going vary subject on how fast you can become familiar about trusts.
How Much Does it Cost to Set Up a Trust?
When an attorney is setting up your trust, it is going to cost from one thousand to seven-thousand dollars subject upon how complex your financial circumstance is. For instance, some circumstances may need a revocable trust including some assets, and an irrevocable trust for others. An extensive estate plan is going to cost more than single trust documentation. Whereas you can create a trust on your own—reading self-help books or online websites—usually, creating a trust is confusing and convoluted. Having correct support, either through online services or lawyer go over of your trust, can provide you with the confidence you require to know you are setting it up the right way.
- Edward A. Haman, E. (2021, January 26). What you need to know to set up a trust. Retrieved April 01, 2021, from https://www.legalzoom.com/articles/what-you-need-to-know-to-set-up-a-trust
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Moshier Law should be your choice when you need the best trust lawyer or the best will lawyer in Scottsdale. An experienced family law attorney will work with you to obtain the best possible outcome in your situation. We advocate for our clients so they have the brightest future possible. Give us a call today at 480-999-0800 for a free consultation.
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