A trust is an important tool to help you plan for the future. While it can take longer to set up than a will, a well-drafted trust can provide significant benefits for your family and loved ones in the long run. Depending on the type of trust you choose and the assets you include in it, a trust can also reduce or avoid estate taxes, which can be costly for your beneficiaries. Whether you are the grantor of the trust or a beneficiary, it is important to understand how trust works and the common terms used in trust documents so that you can be an informed participant in your estate planning process.
A trustee is responsible for managing and distributing assets to trust beneficiaries in accordance with the terms of the trust document. The trustee can be an individual, a financial institution like a bank, or even a professional trust corporation. When selecting a trustee, you should consider their level of experience and expertise, as well as their ability to communicate with you and the other beneficiaries. In addition, a corporate trustee may be able to offer greater protection from family dynamics and disputes that can arise during the trust administration process.
Choosing a trustee is an important decision and should be done with the help of your attorney. Your lawyer can assist you in determining which assets should be moved into the trust fund and how they should be retitled (to reflect the trust ownership). Once the assets are in the trust, you will need to keep a record of them for tax purposes.
The amount of time and fees involved in retitling your assets into the name of your trust will vary depending on the number and type of assets, where they are located, and how they are titled. Generally, you can retitle most assets except real estate yourself by following your attorney’s instructions.
If you have collected art, rare coins or stamps, a trust can provide special protections to ensure that these items are preserved and given away in the manner that you want them to be. The trust can direct that they be sold, or gifted to museums and other charitable organizations.
One of the most significant advantages of a trust is that it can avoid probate, saving your beneficiaries time and money. Probate is a lengthy and public process that can make information about your estate, including what you own, how much you are worth, and who your beneficiaries are, publicly available. A trust, on the other hand, is a private document between parties and does not become part of the public record.
Having a trust can be an effective way to pass on valuables to your loved ones while still having control of them during your lifetime, protect them from creditors and potential lawsuits, reduce or eliminate estate taxes and other expenses, and provide peace of mind knowing that your wishes are being fulfilled. Sunnybranch can guide you through the process of establishing and executing a trust that best meets your needs.