Trust

A trust is a legal document that is frequently used in estate planning to assist a person with distributing property or providing for a loved one after they have passed away. The trust contains written rules and provisions that determine how, what, when, and where a gift or property of the estate is distributed to an heir or beneficiary.

There are two basic types of trusts: living trusts and testamentary trusts. A living trust or an “inter-vivos” trust is set up during a person’s lifetime. A testamentary trust is set up in a will and is established only after the person’s death when the will becomes effective.

Yes. Even if you create a living trust for your assets to be distributed to heirs and beneficiaries, your living trust only covers assets that have been transferred to the trust. You should also have a “pour-over” will. A “pour-over” will is a legal document that works in conjunction with a revocable living trust. If you unintentionally neglect to transfer assets to your living trust, a “pour-over” will adds these assets to the trust at your death.

Yes. Typically, when a living trust is created, you are the person named as the trustee and also one of the beneficiaries of the trust. As the trustee, you are the person who will administer the trust, thereby maintaining control over the assets in the trust.

One of the main benefits of creating a living trust is the avoidance of probate. When a living trust is created and your assets are properly transferred to the trust, the assets can be distributed to heirs and beneficiaries without the time delays and costs associated with probate. If you have just a will, probate is required to distribute your assets.

This depends on whether your trust is revocable or irrevocable. A revocable trust (i.e., a living trust) can be changed or revoked at any time. An irrevocable trust does not allow for changes to be made to the trust after it has been created.