A trust is a legal instrument that safe-keeps assets intended for an individual or beneficiary. The creator of a trust (perhaps a parent or grandparent), is often the “trustee” or the manager of the trust.
Trusts are excellent estate planning tools and offer many advantages:
– For example, if you have a child or grandchild who you know is not yet mature enough to wisely manage their money, a trust is an excellent tool to ensure that they receive your gift but at a time when they are prepared to handle it
– Holding assets in certain kinds of trusts may lead to preferential tax treatment as opposed to owning assets in your own name
– Trusts avoid probate
Many people are already familiar with traditional wills and understand the need to make your “last will and testament”—ie., a legal document in which a person instructs the State how to distribute their property or estate after they die.
While important, having a will alone does not always ensure that your wishes will be timely carried out or that your loved ones will be cared for. Why? Because a will must go through probate, whereas a trust does not.
Probate is the judicial process by which the State administers a decedent’s (deceased person’s) estate.
A decedent’s estate goes through probate under two circumstances:
– when the deceased failed to conduct any estate planning—ie, they died “intestate”,
– or if the deceased died with only a will
The probate process is public and often lengthy, inconvenient, and expensive. With probate, the State must appoint someone to pay the decedent’s bills and that individual must also receive approval from the Court before distributing or liquidating any assets.
This means that it can sometimes take years and costs a decedent’s family thousands of dollars in attorneys’ fees before the family ever receives any of the assets.
To help save your loved ones time and money and to ensure that your wishes are timely carried out, the attorneys at Utah.law, P.C. can create a trust to hold your assets and help you avoid the inconvenience of probate!
The two most popular trusts for estate planning are:
– Living Trusts (aka revocable or intervivos trusts), and
– Irrevocable Trusts
– Living Trusts are often referred to as “will substitutes”. As the name suggests, living trusts are created during a person’s life to hold assets. By placing their assets in a living trust, individuals ensure that their beneficiaries are spared the hassle of probate and will receive prompt access to assets after a decedent’s death. Living trusts are “revocable”, meaning that the manager of the trust can modify the terms of the trust or remove a beneficiary. This gives the manager flexibility in estate planning.
– Similar to a living trust, Irrevocable Trusts also avoid probate. However, irrevocable trusts give individuals even greater protection because assets held in an irrevocable trust enjoy preferable tax treatment and cannot be accessed by the beneficiary’s creditors. Unlike living trusts, an irrevocable trust has its own tax identification number. Irrevocable trusts are ideal when an individual wants to safeguard assets for their beneficiaries rather than give their beneficiaries an outright gift that they may then squander.