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Trusts and Estate Planning – Determining if a Trust is Right for You

Trusts and Estate Planning – Determining if a Trust is Right for You

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Published by Geoffrey Garrett
More and more people are choosing to include a trust as one of those additional components. While only a lengthy consultation with your estate planning attorney can help you make the final decision, answering some basic questions may help you decide if a trust is right for you and if so, which one works for your estate plan.
More and more people are choosing to include a trust as one of those additional components. While only a lengthy consultation with your estate planning attorney can help you make the final decision, answering some basic questions may help you decide if a trust is right for you and if so, which one works for your estate plan.

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Categories:Types, Business/Law
Published by: Geoffrey Garrett on Jul 18, 2013
Copyright:Attribution Non-commercial

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11/18/2014

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TRUSTS ANDESTATE PLANNING
 
Determining if a Trust is Right for You
 
Geoffrey GarrettEstate Planning Attorney
 
Byrd Garrett PLLC| Trusts and Estate Planning: Determining If a Trust is Right For You
 
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Your Last Will and Testament is the cornerstone of your estate plan; however, for most people, an estate plan does not stopthere. Various other estate planning tools are typically used inorder to create a comprehensive estate plan that covers all thevarious facets of estate planning.
More and more people are choosing to include a trust as one of thoseadditional components. While only a lengthy consultation with your estateplanning attorney can help you make the final decision, answering somebasic questions may help you decide if a trust is right for you and if so,which one works for your estate plan.
TRUST BASICS
Decades ago, trusts were used primarily by wealthy families who weretrying to keep the family fortune in the family. Today, trusts have evolved tothe point where even the average individual can benefit from a trust.Whether a trust is intended to guard the family fortune, or simply providefor the family pet, all trusts operate on the same concept and require thesame four elements. At its simplest, a trust is a legal entity wherein you givefiduciary control over assets to a person or institution for the benefit of athird party. To create a trust, you need a trustor (the person who creates thetrust), a trustee (the person who manages the trust assets and administersthe trust), trust assets to fund the trust, and beneficiaries.
 
Byrd Garrett PLLC| Trusts and Estate Planning: Determining If a Trust is Right For You
 
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WHEN DO YOU WANT THE TRUST TO BECOME EFFECTIVE?
Trusts that are created within your Last Will and Testament are referred to as
testamentary trusts
and do not become effective until your death. Trustsmade outside of your Will are
intervivos
, or
living trusts
and becomeeffective when properly signed and funded.Typically, a testamentary trustis used when you have smallchildren whom you wish toprovide for in the event of your death but to whom youcannot leave assets directly.Other common reasons tochoose a testamentary trust are when you are creating a pet trust or acharitable trust.One important consideration when deciding between testamentary andliving trusts is
 property ownership
. Property used to fund a testamentarytrust will remain yours until death whereas property used to fund a livingtrust may or may not remain yours depending on whether you make thattrust revocable or irrevocable. Keep in mind that all assets owned by you atthe time of death are subject to estate taxation. Therefore, if you ownconsiderable assets, an irrevocable living trust may be a better choice.

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