On behalf of Law Offices of Frye, Fortich & Garcia, P.L. | August 15, 2022 | Trusts
A trust is popular estate planning tool that families can use to create a financial legacy for years to come. You know your family best, and a trust can help you customize how you provide for your family, both during your lifetime and after your death.
When people talk about a trust, chances are they are referring to the most common meaning behind the term: simply a trust which benefits the family members of the individual who’s setting up the trust. The person setting up the trust is the grantor or settlor of the trust, while the family members who benefit from the trust are known as the beneficiaries. The trustee is the person you select to manage and administer the trust.
The type of trust you set up will depend on your particular needs.
Revocable Trust – With a revocable trust, provisions can be altered or canceled dependent on wishes of the grantor/originator of the trust. During the life of the trust, income earned is distributed to the grantor, and only after death does property transfer to the beneficiaries of the trust. A revocable trust is typically recognized as an asset of the grantor because it is initially for the benefit of the grantor, and typically remains under the control of the grantor.
Irrevocable Trust – An irrevocable trust is an agreement among a settlor, trustee, and beneficiaries that cannot be revoked or amended. The grantor, or settlor, cannot take back property they transfer to an irrevocable trust. Once property is transferred to an irrevocable trust, it typically no longer belongs to the grantor, since the grantor has given up control of the asset.
While the type of trust, revocable or irrevocable, which you select will have an impact on the specific terms and conditions of the trust, the following are the basic steps typically undertaken by you with your attorney to set up your trust:
- Drafting the trust document
- Choosing a trustee to manage and administer the trust
- Transferring assets into the trust
No matter the type of trust you select, you may want to consult with an estate planning attorney when setting up your trust. In addition to relying on their knowledge of the various terms and conditions which can be implemented in your trust to your maximum advantage, they can provide invaluable assistance in helping you to transfer assets into the trust properly.
