You hear a lot these days about wills, estate and trusts. And while the vast majority of people have at least a general idea what an estate is and what a will is, precious few people have any real knowledge of what a trust is.
Let’s remedy that. Following are the basic features of a trust and info on how to decide if you need one.
A trust agreement is a legal document that spells out in details of how you want specific property (usually money, but not always just money) handled for specific people or purposes. The property is set aside in a special arrangement called being held “in trust”.
As the person setting aside the property, you are called the grantor, or more simply, the trust’s creator, and the person (or persons) that you designate to receive the property is called the beneficiary. As the creator, person or persons setting aside the property, you must decide the rules that you want followed for property held in the trust.
You must then appoint a trustee as the person who will make sure to administer the assets of the trust in accordance with these rules. Obviously, given the high level of responsibility, the trustee must not only be scrupulously honest, but also skilled, organized and a good communicator.
Common objectives for creating trusts are to reduce estate tax liability, to protect property in your estate, to help avoid family stress and strife over inheritance issues and to avoid probate.
That last one is especially important tin these litigious times. It is unfortunately not uncommon for probate disputes to linger for years in court, tying up assets and sapping untold amounts of dollars.
So, the first thing you need before setting up a trust is a clear idea of what purpose you want the trust to serve – that is, what exactly are you trying to achieve with the assets you want to put in trust. There are several different kinds of trust that serve different purposes, all with slightly different rules.
You should talk to a skilled professional to give you information on your options regarding trusts. Obviously, for specific legal advice or financial planning, you should turn to a licensed attorney, but independent experts like Kevin Quinn at Trustee Texas can be a great source of general information.
Kevin Quinn is CEO of Trustee Texas (www.TrusteeTexas.com), an independent trust administrator based in Dallas but operating statewide. For a free initial consultation on how he can help you with your trust, please contact him at (214) 578-2662.