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Following up on the reports about a Michael Jackson will, it is now reported that indeed, Jackson's will has been filed and that it purportedly transfers Michael Jackson's assets to a trust, specifically, the Michael Jackson Family Trust. People may tend to "tune out" when they hear the word trust alone, maybe thinking trusts are complex and of value only to the fabulously wealthy. In reality, however, trusts can be useful tools for a wide variety of people.
First, what's a trust? A trust is basically another way of planning a person's estate, in addition to or instead of, the more popularly known wills. Someone who owns property can create a trust by transferring legal ownership of their property to a person or an institution (such as a bank), who will become the "trustee". That trustee then manages those assets for the benefit of a specified "beneficiary".
Although we usually hear about them after someone dies, trusts can actually be created while people live, not just after death. A trust that has property transferred to it only after someone dies, as appears to be the case with Michael Jackson, is called a testamentary trust. This is distinguished from a "living trust", where property is transferred to the trust while the "grantor" (the owner of the property) is still alive.
One thing to note about testamentary trusts is that they are commonly included in a person's will. As discussed yesterday, a person's will goes through a process called probate where assets, debts, and other requisite affairs get resolved. This means that when a grantor dies, their assets don't automatically get transferred to their testamentary trust. The trust property must go through probate first, and only then will the trust property make. This is a big distinction between the two types of trusts. For a living trust, the property transfer occurs during the grantor's life and such assets do not go through probate.
So why would anyone want to use a trust, living or testamentary, anyway? There are a variety of reasons, really, and it really depends on a person's intent, plus the laws where they live. Here are a few common reasons why people use trusts, both testamentary and living:
These are simply a few of the reasons why people consider trusts, but it should be noted that a good estate plan may use one or more types of trusts, in conjunction with a will, to achieve its goals. Consulting with an experienced estate planning attorney is always the best first step for anyone looking into the issue.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.