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By BRADLEY TUBBS, Legal Intern

How Does a trust fit into an estate plan?

A trust is contractual agreement whereby a person (the ?trustor?) transfers money or other assets to a manager (the ?trustee?) to be used for the benefit of family, friends, or charitable organizations (the ?beneficiaries?). A trust can be created for and during the life of the trustor (a ?living trust?) or upon the trustor?s death (a ?testamentary trust?). The primary benefit of a trust is that the trustor maintains some control over how the gifted assets are distributed. In short, a trust is a way of documenting your wishes for the distribution of your property, while providing stability and peace of mind for you and your beneficiaries.

How is a trust created?

A trust can be created by entering into any legally enforceable agreement (i.e. orally, in writing or by conduct) to manage assets for the benefit of another. Generally, the grantor identifies trust property consisting of any real or personal property including future interests which are to be distributed to one or more beneficiaries. A trustee is then appointed to manage and distribute the assets in strict compliance with the grantor?s express instructions. The trustee is generally a close relation or hired professional who accepts fiduciary duties to the beneficiaries. This means the trustee is required to manage all assets in a prudent manner in the best interests of the beneficiaries.

Who can benefit from a trust as a tool for estate planning?

Anyone who wishes to maintain control over how their resources are distributed can benefit from establishing a trust. However, the creation, maintenance and distribution of a trust can be costly and depending on the type of trust created, a person could relinquish some present control over assets. As such, the following benefits should be weighed and discussed with legal counsel to determine if a trust is right for you:

• Wealth transfer and shifting tax burdens to beneficiaries in lower income brackets
• Avoid the sometimes costly and lengthy process of probating your will
• Preserve assets and investments to be managed by professionals
• Create a financial care plan for children or incapacitated individuals
• Protect assets from creditors
• Provide long term benefits for charitable institutions

A trust may be well worth your time if any of the following describe you: (1) you have assets in excess of $2 million; (2) you have children or family members who require financial support; (3) you worry that your heirs require greater maturity to independently manage an inheritance; (4) you want your assets to benefit an organization or individual in a specified manner; or (5) you want to generally maintain control over your assets for a period time after your death . If you are considering creating a trust as part of your estate plan, the attorneys at Wolff and Hislop can help. Contact us today for a consultation.

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