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Time for a Trust?

Is it time for trust? We all know what it means to trust someone when we are talking about our everyday lives. But what about the trust you hear about that is part of an estate plan?  This article is intended to briefly describe trusts and for you to consider when a trust might be a good idea for your situation.

From a basic perspective, a trust is just a legal relationship between a Trustee (manager of the trust) and the beneficiaries. Trusts are very customizable and can exist for any legal purpose. The most common reason people elect to set up trusts for their benefit while alive, and then pass on to their descendants thereafter. This type of trust is known as a Living Revocable Trust. The greatest benefit of this trust is that it eliminates the need to go through the Court’s Probate process after family members pass away. That means that as long as the Trust is properly set up, your family members do not have to deal with the cost and hassle of dealing with the Court and more attorneys by going through probate.

Hypothetically, let’s say that a Husband and Wife set up a Living Revocable Trust in their names. Both the Husband and Wife serve together as the initial Co-Trustees (Managers) and also as the Beneficiaries. With the help of an attorney, they set up the trust and transfer all their personal and real property in to the name of the Trust. This means that their house, bank accounts, 401ks, life insurance, and all other personal property are titled in the name of the Trust. Instead of the title their houses being in “John and Jane Doe”, it would actually be titled “The John and Jane Doe Living Revocable Trust”. The benefit of assigning all property to the name of the Trust is that after the first spouse passes away, the surviving spouse simply becomes the sole Trustee and the sole Beneficiary. There is no need to go through probate because nothing has changed, all the assets are still titled in the Trust and the surviving spouse is the still the manager and beneficiary of the trust. When the second spouse passes, then the trust would terminate and distribute the remainder to the contingent beneficiaries of the Trust, likely the descendants of the Husband and Wife. Again, this would not require having to go through probate if everything had been set up correctly with the Trust.

I encourage you to speak with your attorney about your current estate plan and to think about the beneficial value of having a trust as part of your estate plan. Trusts are a fantastic tool that can help simplify your estate while living and to allow families to avoid the extra costs and hassle after a loved one has passed away. Regardless of your ultimate decision, it is important to consider all appropriate estate planning options. Depending on your specific situation, you may realize that now is the right time to create a trust.

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