In US law, a trust is an arrangement which enables another person, known as a trustee, to control assets on behalf of a beneficiary (a trustor) or beneficiaries (trustors). Trusts are a very complicated area of the law and can be arranged in many different ways. Trusts set out exactly how a person’s property and other assets are to be passed to beneficiaries upon the occurrence of a certain event, usually death.
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Because trusts avoid the probate process (i.e. wills), beneficiaries can benefit and gain access to the assets of the trust much more quickly. Furthermore, depending on the type of trust, fewer taxes may have to be paid by a beneficiary.
#1: Benefits of Using a Trust
Trusts are very precise legal instruments and you can specify precisely the terms of your trust. For example, you can control when, to whom and how much distribution of a certain asset is made. You can also create a revocable trust where you can still access the assets of a trust during your lifetime and then designate to whom the remainder passes to.
Trusts also offer a level of privacy which probate does not, because probate falls within the public interest and goes on public record. A trust can enable your assets to pass outside of the probate process and remain private, which can dramatically reduce the amount of taxes which will need to be paid.
#2: Deciding on a Trust
Another complication to the whole trusts area of the law is the fact that state laws can vary trusts law significantly. Before you come to any final decision, you should consult a trusts lawyer within your state.
Choosing to create a trust is a very long-winded and complicated process, so the guidance of a specialist lawyer who has experience in estate planning and trusts is vital to ensure that your trusts are valid and that your beneficiaries will face no issues when it is time for your trust to be executed.
#3: Trust Administration
After losing a close friend, family member, or loved one, the last thing which you want to have to deal with is the complicated legal process of executing or winding up their trust. Trusts is a topic which is recognized to be one of the most complicated among all other areas of legal study and practice, and administrating a trust requires a great deal of care and attention to the laws, regulations and rules surrounding the probate process.
Failing to properly adhere to these laws and rules could cause significant harm to your loved one’s trust or estate. It is important that you appoint a trustworthy administrator such as Trust Point who can take care of the whole process for you. Even after appointing an administrator for a loved one’s trust, it is still important that you are aware of the whole trusts process and keep on top of affairs to ensure that your rights as a party to the trust are protected.