Estate Planning - Trusts

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Trusts are powerful legal documents that can be used to pass on money and property to others either after your death or while you are still alive.

The person creating the trust, the "Grantor," transfers his or her legal title to property to the person controlling the trust, the "Trustee," with written instructions for what the Trustee is to do with the assets in the trust and any interest or income those assets earn.

There are many types of trusts, but two are common. The first is the revocable trust, sometimes called a living trust. In a living trust, the Grantor and the Trustee are usually the same person. The Trustee controls the trust on behalf of the Grantor and the Grantor has the right to revoke or end the trust at any time and reclaim title to the assets in the trust. Living trusts are usually done to avoid probate. They have no income tax benefits.

The other common trust is the irrevocable trust. The Trustee and the Grantor must be different people. This trust is permanent and the Grantor cannot revoke or undo the trust once it has been established. Irrevocable trusts are often used as estate planning tools for wealthy people because they are a way to defer taxes.

One important thing to keep in mind about trusts is that not everyone needs to have a trust. In fact, most people can accomplish their estate planning needs without one. Creating a trust is a complex process and you should consult with your attorney and your financial planner during this process. If you have questions about trusts, please feel free to contact us for more information.