A Trust is one of the most important documents you can prepare in your lifetime

Considering a Trust

A Trust is one of the most important documents you can prepare in your lifetime. Like a will, a trust is used to manage assets for your benefit during your life and control the distribution of your property and investments after your death.

A Trust is a type of contract.   It is a contract between you as the Trustmaker and you, your spouse, or another person as the Trustee who manages the Trust property, called the “Trust Estate”. You designate a Successor Trustee who steps in to take control of the management of your Trust Estate on your death and distribute your estate as you direct. You also designate your beneficiaries and control how and when your beneficiaries will receive their share of your estate.

Unlike a will, a trust can protect your property and investments while you are alive.   By transferring ownership of your property to your trust, you will continue to enjoy all that is in your Trust Estate, even though you are no longer the owner.

You can devise a trust to protect you in the event of incapacity or disability. You avoid the expense of having a loved one hire an attorney to ask a judge to determine who should be appointed guardian or conservator. Instead, you take control and designate your own guardian and conservator without anyone having to step into a court of law.

You can also avoid the expense of probate through a properly drafted trust. In some instances, a trust can provide substantial income tax savings, capital gains savings, and estate tax avoidance.

There are multiple kinds of Trusts available to you.   Some examples are: 1) Revocable Living Trusts; 2) Special Needs Trusts; 3)   Irrevocable Life Insurance Trusts; 4) Marital Deduction and Bypass Trusts; 5) Section 2503(b) and 2503(c) Trusts; 6) Grantor Retained Interest Trusts; 7) Charitable Remainder Trusts; 8) Intentionally Defective Trusts. There are many different forms of Trusts to benefit you in construction of the Trust that is best suited for you.

Some Trusts are simple and some are complex. Call John K. Rice today to make your appointment to begin this important step in managing your property and investments both during your life and after your death.



Some of the Benefits of a Trust Include:

A living trust is funded with your assets such as real estate holdings, bank accounts, investments accounts, stocks, and bond accounts and certificates. These asset are transferred to the trust during your lifetime. Upon your death they are distributed quickly and easily to the assigned beneficiaries by your chosen representative, called a “Successor Trustee.” No court action is involved.

If you have substantial assets, a living trust can eliminate or reduce federal estate taxes.

Without a Trust, your personal representative will be required to probate your estate, even if you have a will. A Trust allows your heirs to avoid probate which means:

  • Your assets will be distributed to the designated heirs much faster, generally within weeks as opposed to months or years which could happen with a last will and testament;
  • Aside from paying off your debts, your family will not have to worry about probate and court costs;
  • If you own out-of-state property, a trust can help you escapes probate in that state as well. If you own property in multiple states, without a living trust, your estate could be subject to multiple probates, each one according to the laws in that state.

A living trust can assure that your exact wishes will be followed upon your death and that your family will be provided for quickly. If you have children or grandchildren, a living trust can prevent court control of minors’ inheritances and ensure assets remain in trust until you want beneficiaries to inherit them.

Unlike a will, trusts are not public record. This means that any and all transactions involved with the trust are private both before and after your death.

If you become incapacitated, the assigned successor trustee can manage your affairs without court intervention; but if you dispute your incapacity, you will retain control of your affairs by revoking the trust.

If there are no federal income or estate tax benefits in creating a Trust, why would I want a Trust?

With a Trust you 1) avoid probate; 2) save on guardian and conservator court actions in the event of your incompetence; 3) insure privacy; 4) provide the potential for complete control of your property and investments during your life and after your death.   These are some of the major benefits.   There are many others.

What is a “Pour-over Trust?”

It is a trust into which your property and investments are “poured” from your will, life insurance, pension or profit sharing plan or other employee benefit plan.   It is the receptacle for any asset you would like to pour into it.

What is a “Contingent Trust?”

This kind of Trust is also known as a step up or standby Trust.   A person you select takes over and manages and invests your assets only when you are unable to do so.

When is a Trust funded?

You can fund your trust at the time it is established or at a later date.   It is not funded until the Trust becomes the owner of money, property or other investments.   An unfunded trust accomplishes nothing.

When does a revocable Trust become irrevocable?

Your revocable trust does not become irrevocable until you give up the right to revoke, or upon your death.   Generally, you give up your right to revoke your trust when you are incompetent.

What factors should be considered in selection a Trustee?

Business judgment, honesty, and integrity.   A Trustee must be over the age of 18 years.   It is often appropriate to appoint one of your children, if over the age of 18 to be a Successor Trustee.   This often provides a sense of gratitude and closure to your child and family upon your death. On the other, hand, there may be disadvantages. For example, a corporate or professional Trustee may be warranted if there is a clear potential for conflict.

What is the effect of a revocable Trust on creditors?

Generally, a revocable Trust does not protect you, the Trustmaker, from the claims of your creditors. If creditors are a concern, an Irrevocable Trust or Asset Protection Trust should be considered.

Are there advantages to making the Trust the beneficiary of qualified plan benefits?

Yes. It helps to unify the administration of your estate and objectives. It also allows for deferring the distribution of the money to a child who may not be ready to handle a large sum of money.   You may be able to defer required minimum distributions from the plan over the life expectancy of a beneficiary of the Trust

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