A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged and can specify exactly how and when the assets pass to the beneficiaries. … Other benefits of trusts include: Control of your wealth.
A living trust is one way to plan for passing on your estate—property, investments, and other assets—to your family or other beneficiaries. It is a legal agreement people often use to plan ahead for the possibility of becoming mentally incapacitated so that the burdensome probate process can be avoided when they die.1 When you die, a living trust can act like a will, even replacing the need for one.
One type of living trust can shelter assets from taxes, creditors, or legal problems. All living trusts are revocable or irrevocable. They are created and go into effect while you’re living. The most significant difference between them involves who can manage the trust’s assets and whether the trust’s terms can ever be changed.
When you pass away, you want to be confident that your belongings and property will go to the right people. Creating an estate plan can help you do that, and a trust can be part of it. A trust is a legal entity in which you can place your assets to be used by you or your future heirs. Like a will, a trust has rules about which assets go to whom and how the assets can be used.
Trusts can also be used while you are still alive. These are called living trusts or inter-vivo trusts. You may use these trusts to, for example, create a fund for your children to access when they reach a certain age.
With another kind of trust — an irrevocable trust — you relinquish your ability to cancel the trust or modify its terms, in return for certain benefits like minimizing taxes or protecting your assets from creditors. Remember that a trust is just one part of an estate plan.
You want to plan your estate but have a complicated financial situation, look for an attorney with a great deal of experience drafting trusts, ideally someone with a tax background. You may need to find someone with knowledge or expertise in multiple areas.
Trust accounts are important estate planning tools, enabling you to effectively manage your property now and steadily transitioning your affairs after you pass. While you may be generally familiar with the term “trustee”, it is helpful to understand the role of the trustee when developing an estate plan to suit your needs.
A trustee is a person or business appointed to manage the assets held in your trust, and to execute the terms. In following the specifications outlined in the trust document, the trustee may invest trust assets and distribute trust income to beneficiaries. The trustee must act in the best interest of the beneficiary and will be held legally accountable for any actions that prove otherwise. Trustees that misappropriate trust assets can be removed or sued by the beneficiaries.
While the specific duties of the trustee vary depending upon the trust, a trustee may have to do the following:
When trust accounts are complex, you may appoint several trustees to manage the trust and designate specific responsibilities for each trustee.
You may designate a competent adult, financial institution, law firm, or other business as your trustee. When selecting an individual to assume this role, make sure they understand both the nature of the trust and their duties before acceptance this role. While you may serve as trustee of your trust now, appoint an alternate trustee to serve should you become incapacitated or for after your death.
In creating a trust account, legal ownership of the property or assets is transferred to a trustee, who assumes responsibility for managing the property. The property is then held for a designated third party, otherwise known as the beneficiary.
The experienced Maryland estate planning attorneys at Altman & Associates are specialists in estate planning. It is all we do. For over 25 years, our estate planning professionals have helped individuals and families reach their long-term financial goals by designing estate plans specifically tailored to their needs. We develop last will and testaments, powers of attorney, living wills, healthcare surrogate designations and other estate planning tools. If you are contemplating estate planning, or considering updating an existing plan, then arrange for a confidential consultation with one of our estate planning specialists to discuss your needs. We have convenient office locations in both Rockville and Columbia and can be reached at 301-468-3220 or online.