Trust Formation
Forming a trust may sound complicated but they’re actually much more commonly used than most people realize. Taking a little bit of time and money to form a trust can be one of the simplest ways to ensure that your assets don’t get tied up in endless legal proceedings following your death or unexpected incapacitation. Creating a trust allows you to designate a successor for any assets you choose to place within the trust; this person will be able to take over managing your finances and belongings as soon as the need arises. Your trust can be as simple or as complex as you would like it to be and with the help of an attorney you can use your trust to ensure that your estate doesn’t end up in frustrating probate or intestate proceedings.
Use a Trust to Avoid Probate
The probate process is slow and cumbersome. The process requires that that court appoint an administrator, and provide that administrator with letters of administration. Until these two steps have been completed, a deceased person’s heirs cannot legally list or sell the home that they left behind. Additionally, the court has to approve the sale of the home, which must also be subject to bids from the public before the contracts can be finalized. All of this, however, can be avoided ahead of time by forming a trust.
With a trust, you choose a person to automatically step into the role of trustee upon your death. The successor trustee has the legal authority to act on behalf of the assets you placed in your trust. This is what makes trusts so popular. You don’t have to wait for a judge to appoint an administrator or executor who can handle your affairs. Real property, like your loved one’s house, can be sold almost immediately if it was placed in a trust and the successor trustee decides to sell it. While the probate court does have jurisdiction over matters involving trusts, if yours has been drafted properly and administered correctly after its formation, court intervention can be entirely avoided.
Trusts as Estate Planning Tools
A trust is an unique estate planning tool. Unlike your Will, which only takes effect upon your death, a trust is formed and operated while you are living. Most often a person will create their trust, transfer most or all of their assets to the trust, including their home or other real estate holdings, and then elect themselves as the trustee. In this way, your assets are secured within the trust with the safety net of an appointed successor trustee, but you retain control over your assets as usual. You, as the trustee, always have the option of transferring your assets back out of the trust and revoking the trust, but this is uncommon as the terms of the trust can be amended to accommodate any changes in your life or your plan for your assets.
An important feature available to the trustee when using a trust as a tool for estate planning, is that trust can be made irrevocable upon your death. What this means is that no one, including the successor trustee, can dissolve the trust and remove the assets. The trust must be administered by the successor trustee according to the provisions you have laid out in the trust document. It is the legal responsibility of the successor trustee, someone you have chosen, to distribute your property correctly. They can be instructed sell your property and distribute it in certain amounts to your relatives or other chosen recipients. You can also leave instruction for distributions to be made to certain charities. Should you desire, you can even elect to have the person you name as successor trustee receive some compensation from the trust for their service. Trusts provide many options and, for that reason, are an excellent estate planning tool.
A trust is the perfect estate planning tool, but it only works out if the trust is planned and prepared ahead of time. Visit our contact page to make an appointment for a free consultation on your trust and estate planning needs.