A trust is a powerful estate planning tool that has many advantages, and there are several types of property that may be held by a trust. Let’s take a quick look at what a trust is…

A trust is a legal arrangement in which a ‘grantor’, the person creating the trust, transfers ownership of property into the name of the trust and selects a trustee to manage it. The trustee may be a family member, a trust attorney, or, in the case of a living trust, the grantor. The trustee is tasked with managing or distributing the property for the benefit of the beneficiaries named within the trust documents.

Property that may be held within a trust generally falls into three categories:

Real Estate

Real estate may be held within a trust, whether it is a primary residence, a farm or an investment property.

Tangible Personal Property

Tangible personal property may also be held by a trust, and the term tangible means that it is property that can be touched, such as a vehicle, boat or a jewelry collection.

Intangible Personal Property

Intangible property is property that you cannot touch, such as a the right to receive the proceeds of a life insurance policy or the right to future ownership. Intangible property includes securities, such as stocks and bonds, which are popular forms of trust property. Other forms of intangible property include royalties, patents and partnership interests.

Transferring property into a trust is known as funding a trust, and each type of property requires the proper transfer to ensure it is completed properly.

Trust property comes in many different forms, and each form of property requires a different method of management. Working with a Trust Attorney ensures that not only are you setting up a trust that meets your needs, but that each step of setting up a trust is completed properly.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

A Revocable Living Trust is one of the most efficient ways of avoiding Conservatorship. If you are in a debilitating accident, suffer a stroke, develop Alzheimer’s or other dementia otherwise become incapacited, a Successor Trustee of your choosing would manage the assets instead of a Court-appointed conservator. As many of you know, when my mother developed early-onset Alzheimer’s I had to hire an attorney, go to court, ask to have her publicly declared incompetent, and then follow the court’s investment instructions and file annual accountings and reports with the court. This court oversight continues for the rest of your life. The Revocable Living Trust avoids all of the legal hassle, and allows someone of your choosing to continue to manage your affairs according to your instructions, rather than the court’s.

How to Set Up a Revocable Living Trust

A Trust requires three parties – Grantor (also known as settlor or trustor), Trustees and Beneficiaries. Initially, all three parties are the same person – you.

When you set up the Trust, you continue to handle all your assets in the same manner as you normally would – they are just in the name of the Trust instead of you as an individual.

In the event that you become incapacitated, your Successor Trustee would step in and manage the assets for you. Since all the assets are funded into the Trust, there is nothing in your name as an individual and nothing for the court to address.

You will still of course, need to include Advanced Medical Directives in your estate plan to ensure that all your wishes regarding medical care and treatment are honored.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Understanding the difference between a living trust and a testamentary trust is essential to creating a trust that meets your goals.

A living trust is one that you establish and that takes effect while you’re alive. In order to create a living trust, you’ll sign a trust document that identifies you, as well as the trustee you’ve chosen to manage the trust (usually yourself), and the beneficiaries of the trust. The trust document also spells out the purposes of the trust, and lists the trustee’s powers and duties. Once the trust document is signed by both you and the trustee, you’ll have to fund the trust. This means transferring ownership of the property you want held by the trust into the name of the trustee. Once this is done, everything is business as usual. The beauty of a living trust is that if you become incapacitated, and when you die, there is no need for the legal probate process.

A testamentary trust is created under your will and doesn’t take effect until you die. If you want to establish a testamentary trust, you’ll use your will to identify the trustee, the beneficiaries, and the purposes of the trust. You’ll also identify the property to be held by the trust. Once your will goes through probate, the trustee will take control of the property and manage it on behalf of the beneficiaries you’ve identified.

An estate planning attorney can advise you as to which type of trust best meets your individual goals and needs.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

A trust is essentially a “box” that can hold your assets. Instead of having the deed to your house titled in your name for example, the deed would be in the name of the trust, such as the Smith Family Trust.

This small change in how your assets are titled can provide some extensive tax breaks and can also protect your estate from going to a non-family member during a divorce or being seized in a lawsuit.

And here’s how it works:

There are three basic parties to a trust:

• The Trustor (also called a “Settlor”) who establishes the trust and provides the assets it holds
• The Trustee who manages the trust and its assets. This can be a person, a business or an organization.
• The Beneficiary who receives the benefit of the assets in the trust.

Now, these three parties do not have to be different people – quite the contrary, you can be the Trustor, the Trustee and the Beneficiary, allowing you to have complete control over your assets while still protecting them from a variety of third party claims.

The trust can be revocable, meaning you can change or even cancel it at any time, or irrevocable, meaning that once the trust is established, it’s there for good.

Trusts can also be used to provide for disabled dependents after you’re gone, by allowing them to benefit from the assets in the trust without affecting their eligibility for government-assistance programs.

Trusts can also help you avoid probate, a lengthy and often costly process of distributing assets after you pass on.

To learn more about trusts and decide if there’s one right for you, give us a call today.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.