Estate Planning
How Does a Trust Work?
Black and Davison
You’ve been thinking that it’s time to put together and implement an estate plan, so that you can protect your heirs and ensure the orderly distribution of your estate. You may be uncertain about the different options available to you, including whether it’s in your best interests to establish a trust to meet your goals.
What is a Trust?
In essence, a trust is a separate legal entity that can hold, obtain and distribute property. A trust is created by the execution of a written legal document, which identifies the terms. The trust typically involves three different parties—the trustor, the trustee and any beneficiaries. The trustor is the person who created the trust and customarily the one who places property into the trust. The trustee is the person or entity (a trustee can be an institution, such as a bank) given the responsibility for managing the trust in accordance with the trust terms. The beneficiaries are individuals or institutions that have been granted some right to distributions of income or property from the trust.
How Does a Trust Benefit You?
One of the common objectives of an estate plan is to avoid the probate process. In the probate process, the court oversees the orderly distribution of property in an estate. The process can be complex and time-consuming, tying up estate assets for months or even years. In addition, the costs of probate can be considerable…up to 7% of the estate.
However, the probate process only applies to property owned by the deceased at the time of death. When you place property in trust, you no longer own it, even if you have certain rights to use it. Because it’s no longer your property, it is not subject to probate. Instead, upon your death, it typically stays exactly where it is…in the trust.
Contact Our Experienced Estate Planning Attorneys
Send us an e-mail or call our office to schedule an appointment to discuss any legal issue affecting your business. Evening and weekend consultations are available upon request.