By Oni Harton, J.D. | Legally reviewed by Aisha Success, Esq. | Last reviewed October 05, 2023
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A trust is an estate planning document that can help manage your property and assets during your lifetime and ensure a smooth transition of affairs after death.
A trust helps ensure that your family members and other loved ones receive trust assets without probate court involvement. Even if your estate cannot avoid probate, having certain assets in a trust, including real estate, can expedite the probate process.
An estate planning attorney can help. If you have a complex estate, it's prudent to speak with a local estate planning attorney. They will listen to your concerns. Open and honest communication is critical for any attorney-client relationship.
Most attorneys offer a free consultation. They will discuss your case and their fee structure—whether they work on a flat fee or an hourly basis. Importantly, you can evaluate whether you communicate well with the lawyer before selecting an attorney.
They can give you legal advice about drafting documents to fit your situation. Find a local estate planning attorney today.
Trusts involve an arrangement in which a grantor (settlor or trustor) transfers assets to a trustee to benefit a beneficiary. The trustee holds the title to the assets for the trust. They do so subject to a strict fiduciary duty obligating the trustee to manage the trust assets responsibly, productively, and for the benefit of the trust beneficiary.
Trusts can replace or supplement wills and help manage property during life. A trust manages the distribution of a person's property by transferring its benefits and obligations to different people. Trust administration can occur through an individual trustee, a corporate trustee, or even an attorney serving as a trustee.
A trust can replace or supplement a will and help manage property during your life. A trust manages the distribution of a person's property by transferring its benefits and obligations to different people. A trust attorney can explain your legal options for setting up a trust under the applicable state laws.
A trust can be created during a person's lifetime and survive the person's death. A trust can also be created by a will and formed after death. The testamentary trust is not automatically created at death. It is commonly specified in a will. Because it's a provision in a will, the trust property must go through probate before the trust's creation.
Once a grantor places assets into the trust, they belong to the trust itself, not the trustee. The property remains subject to the rules and instructions of the trust contract.
Put another way, a trust is a right in property, which is held in a fiduciary relationship by one party for the benefit of another. The trustee is the one who holds title to the trust property, and the beneficiary is the person who benefits from the trust.
Estate and probate terms may seem foreign. For legal definitions related to estates and trusts, visit the Estate and Probate Law Glossary in the FindLaw Legal Dictionary.
The terms of a trust vary widely as the trustors who set them up. Suppose a grantor transfers money to a bank account. At the trust's creation, the bank serves as the trustee for the grantor's dependents, who are minor children.
The bank receives instructions to pay the children's college expenses as needed. The bank carefully manages the money to ensure funds are available through the years. The children cannot control the funds nor use the money for any other purposes except college expenses. The children graduated college and never had to worry about expenses. The trust served its purpose. Any remaining trust funds will go to the children or wherever the terms of the trust direct.
Many types of trusts exist, but the basic types are revocable and irrevocable.
Revocable trusts are created during the grantor's lifetime and can be altered, modified, or revoked. Often called a living trust, these are trusts in which the grantor transfers the property's title to a trust. The grantor typically serves as the initial trustee, but this is not a requirement. The grantor can remove the property from the trust during their lifetime.
If the grantor transfers the property's ownership to a revocable trust during the grantor's lifetime, the assets will not be subject to probate. Typically, a revocable trust converts into an irrevocable trust upon the grantor's death.
A grantor cannot alter, change, modify, or revoke an irrevocable trust after its creation. Once a property transfers irrevocable trust, no one, including the trustor, can remove the property from the trust.
It is possible to purchase life insurance, the benefits of which can be held by an irrevocable trust. This type of survivorship life insurance can be used for estate tax planning purposes in large estates. However, survivorship life insurance held in an irrevocable trust can have serious negative consequences. Read more about irrevocable life insurance trusts.
A special needs trust is a specialized trust that sets aside funds for a beneficiary with a disability. The goal is to strengthen financial security for disabled individuals. It can enhance quality of life without disqualifying them from need-based government benefits, such as Social Security benefits. These benefits include Supplemental Security Income. Without a special needs trust, the individual who receives financial help from a loved one may no longer qualify for means-tested benefits.
Charitable Trusts are trusts which benefit a particular charity or the public in general. Typically, charitable trusts are established as part of an estate plan to lower or avoid the imposition of estate and gift tax.
A charitable remainder trust (CRT) funded during the grantor's lifetime can be a financial planning tool, providing the trustmaker with valuable lifetime benefits. In addition to the financial benefits, there is the intangible benefit of rewarding the trustmaker's altruism. Charities usually immediately honor the donors who have named the charity as the beneficiary of a CRT.
Trusts can be quite involved and complex. It's wise to contact an experienced trust attorney to learn about a trust's legal rights and obligations.
A trust is just one estate planning document in a comprehensive estate plan. FindLaw has partnered with experienced attorneys to create DIY estate planning forms to complete from the comfort of your home.
Don't delay in protecting your assets, children, pets, and healthcare wishes with these estate planning documents:
If you have a complex estate, speak with a local estate planning attorney. They can provide legal advice about drafting documents to fit your situation.
A trust lawyer or estate planning attorney can also help with setting up a trust and explain how it could fit into your estate plan. Your attorney can work with other professionals on your team, including financial advisors and tax law accounts, to ensure your interests are served.
Contact a qualified attorney to make sure your rights and interests get protected.
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