What is a Trust?
A trust can be a very versatile tool in your estate plan. While there are many types of trusts, they all share some common characteristics. A trust is an arrangement whereby a person (usually called a grantor, settlor, or trustor) transfers property to an individual or corporate fiduciary (called a trustee) for the benefit of another (called a beneficiary). Because trusts are designed to have separate legal identities from the grantor, the trustee, and the beneficiary, they offer more flexible ways of managing, distributing, and protecting your family’s assets than a will can accomplish alone.
Trusts can be Revocable or Irrevocable
Revocable Trusts are created during a person’s life (also called revocable living trusts, or revocable inter vivos trusts) and can be changed, amended, or revoked entirely during the person’s life. Irrevocable Trusts may be created during a person’s lifetime (irrevocable living trusts, or irrevocable inter vivos trusts), or created at death by language included in a person’s will (testamentary trusts). As the name implies, these trusts cannot be changed, amended, or revoked by the person who created the trust.
Third Party Trusts
When a trust is created with assets belonging to anyone other than the beneficiary or the beneficiary’s spouse, it’s a third party trust. These tailored trusts are often created as part of a family’s estate planning when a child has disabilities, including serious mental illness or addiction disorders. The beneficiary has nothing to do with creating this trust. It can be either revocable (changeable) or irrevocable without having negative consequences for the beneficiary. What’s important is that the beneficiary not be given any right to control the trust or the trustee, or to demand distributions.
Trusts Maintain Your Privacy
All documents that go through probate, including wills, become public record. Living trusts do not go through probate. Therefore, absent some rare exceptions, living trusts are never made a matter of public record. So, a living trust does not get filed with the court, either before or after your death.Why? Because a probate court will not be involved in supervising your trustee [the person you name in the trust document to handle the distribution of the trust assets]. Your trustee simply follows any instructions you wrote and doesn’t need to wait for validation or approval from any source, including a court.
To learn more about Trusts or to have on executed, please contact Seiter Law directly.