Unlike a Will, a Trust is a legal document that is used to avoid probate, retain privacy, and, in some cases, avoid or delay taxes. It’s estimated that only about 20% of Americans have Family Trusts. So what does a Trust do, and how do you know whether a Trust could benefit you?
A Family Trust (sometimes referred to as an “inter vivos”, “revocable”, or “family trust”) is a written legal document through which your assets are placed into trust for your benefit during your lifetime and transferred to designated beneficiaries at your death by your “trustee” or “successor trustee”. If all of your assets are titled properly, there will be no need for probate of your estate, thus making it a faster and less costly process to take care of final expenses and distribute the assets to your heirs. It is important to note, though, that for people with simple estate plans and for young married couples with no children or significant assets, a family trust is probably not financially beneficial or necessary.
A family trust is not made public and your estate will be distributed in private. A Will, on the other hand, is a public record and so all transactions will be public as well. An additional benefit
PROTECTION FOR YOU
Another benefit is that a family trust is written so that your Trustee, or Successor Trustee, can automatically ‘jump in’ and take care of the trust if you become ill or incapacitated.
A family trust is revocable. This means that you can amend it or revoke (cancel) it at any time.
Trustor - The person who creates the trust
Trustee - The third party designated in a trust document to manage the assets of the trust.
This can be a single person, two or more joint trustees, or a business entity such as a bank, a trust management company, or the Texas Conference Association of Seventh-day Adventists.
The beneficiaries may also be trustees. In the case of a family trust, the Trustor(s) may also be the trustee(s).
Beneficiary - A person(s) or entity(ties) for whose benefit the trust was created.
Beneficiaries are typically a spouse, child/ren, grandchild/ren, or other relative(s) of the Trustor; and/or a charitable organization(s) chosen by the Trustor.
Trust Agreement - A document that sets up a trust. It designates the Trustee(s) and the beneficiaries, and gives the trustee(s) directions as to how the assets are to be managed and distributed to the beneficiaries.