Like many people, you probably think about executing a Last Will and Testament when you contemplate the creation of your estate plan. Your Will may indeed provide the foundation for your estate plan; however, a well-rounded and comprehensive estate plan will likely include additional estate planning tools and strategies as well. One of the most popular of those additional tools is a trust. Trusts are popular for a number of reasons, including the flexible nature of a trust that allows you to achieve so many diverse estate planning goals. To get you started thinking about how you might benefit from the addition of a trust to your estate plan, the Beverly trust attorneys at DeBruyckere Law Offices discuss trust benefits.
What Is a Trust?
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. In fact, most people enter into small trust agreements on a daily basis without realizing it.
Testamentary vs. Living Trusts
All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor and which is typically activated by a provision in the Settlor’s Will. A living trust is a trust that takes effect as soon as all the legalities of creation are in place.
Revocable vs. Irrevocable Trusts
Trust are further divided into revocable and irrevocable trusts. As the name implies, a revocable trust is one that can be modified or revoked by the Settlor at any time and without the need to provide a reason. An irrevocable living trust, once it takes effect, cannot be modified or revoked by the Settlor for any reason. Typically, an irrevocable trust can only be changed or revoked by court order. Testamentary trusts are all revocable because they do not even go into effect until the death of the Settlor at which point they are triggered by a Will that can always be changed prior to the death of the Settlor.
A trust can be used to help achieve a seemingly endless number of estate planning goals. For example:
- Probate avoidance – assets held in a trust bypass the probate process. If you want assets to be readily available to beneficiaries after your death, a living trust is often a better option for distributing assets than a Last Will and Testament because assets gifted through your Will must first go through probate.
- Incapacity planning – a revocable living trust works as an incapacity planning tool by allowing you to name yourself as the Trustee and the individual you wish to take over control of your assets in the event of your incapacity as the successor Trustee. If you become incapacitated, the successor Trustee takes over management of trust assets automatically.
- Asset protection – assets held in an irrevocable living trust are no longer legally part of your estate. Therefore, they are out of the reach of creditors or other threats to your assets.
Trusts also provide some general benefits that other estate planning tools may not provide, such as:
- Control – by using a trust to distribute assets, you effectively retain a certain degree of control over how those assets are used through the trust terms that you create.
- Ease of modification – a revocable living trust or testamentary trust can be easily modified, making it simple to add or remove both assets and beneficiaries.
- Privacy – the terms of your Last Will and Testament will become public record during the probate of your estate. A terms of a Trust, on the other hand, almost always remain private.
Contact Beverly Trust Attorneys
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns about trust benefits, or wish to discuss how a trust might fit into your estate plan, contact the experienced Beverly trust attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.