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A trust is a contractual arrangement between the party who enters property or assets into it for the benefit of others, called the settler, and the person entrusted to manage those properties and assets, called the trustee. The purpose of a trust is to execute the distributive intent of the settler with regard to all property and assets placed into the trust and each of the intended beneficiaries. A living trust can remain in effect for many years after the settler’s death, or terminate many years prior.
Trusts coordinate the distributive intent of the settler with the consummation of time and circumstances required for a beneficiary to legally take possession of a parcel of property. For example, a father might wish to pass down to his teenage son a collection of rare hunting rifles, but the son cannot legally take possession of the collection until age 21. Under these circumstances, the trustee would be charged with possessing and properly preserving the collection until the intended beneficiary becomes 21 years of age or whatever age the settler deems appropriate and specifies in the terms. Also, the settler may establish conditions necessary for the receipt of property, such as, for example, specifying that the son must have graduated college in order to inherit the prized firearms.
Trusts provide professional preservation of items requiring special care, such as wine collections, and ensure that complex financial holdings appreciate at acceptable rates.
What do “Revocable” and “Living” Mean?
A revocable living trust can be changed or repealed by the settler at any time so long as the settler is capable of making legal decisions, whereas an irrevocable living trust cannot amended once it is executed. A living trust is one creative and effective during the life of the settler, while a testamentary trust is one written into a will and which becomes effective upon the death of the settler.
How Does a Trust Serve Me Better Than a will?
Each parcel of property specified in a trust circumvents probate court and will be managed and distributed exactly according to the language of the trust. This provides the settler with the advantage of certainty regarding the distribution of assets because probate courts can sometimes produce unpredictable and unintended results. Also, the fees necessary to execute a trust are clearly recognizable and eliminate the uncertainty of costs associated with probate court.
A living trust also allows flexibility while the settler suffers periods of incapacity. Using durable power of attorney, the trustee or other designee of the settler can amend the trust during such periods while a will cannot be altered while the testator is incapacitated.
Does a Trust Eliminate the Need for a Will?
Depending on the nature of the estate assets and the characteristics of the beneficiaries, a trust might not be the best choice for passing down one’s estate. A trust does have the ability to replace a will entirely, however, it is beneficial for a settler also to create a will also because assets that are acquired after executing a trust, and therefore not expressly identified in the trust, will be pass through the probate process, and a will can act as a catch all such items.
Get Legal Assistance
If your estate contains complicated assets that require professional management or intended distribution to parties who are currently ineligible for receipt, a trust might provide solutions. An experienced lawyer can provide sound advice when considering the preparation of trusts and wills. Contact the attorneys at The Kamerow Law Firm, PLLC for a free and confidential consultation by calling 703-370-8088.