What Is A Trust?

Not many people understand what a Trust is and how it differs from a Will. There are many types of trusts, but the one main benefit of all trusts is how they will keep your estate out of probate after your death.

Not many people understand what a Trust is and how it differs from a Will. There are many types of Trusts, but the one main benefit of all Trusts is how they will keep your estate out of probate after your death.

The main difference between a Trust and a Will is the fact that your property won't go through probate when you die. With a Will the transfer of property takes place at your death and will need to go through the court system, (probate) to determine the legalities of the will and the properties being dispersed. During probate much of the estate is taken by taxes and sometimes attorneys. When you create a Trust you transfer your properties to it while you are still alive and it continues on through your death.

According to financial planning experts the first "Trusts" were done as much as two thousand years ago during the reign of Augustus Ceaser. It is thought that a Roman citizen wanted to pass on his property to his children but his wife was not Roman and therefore the children could not have the property. He left all his property to a Roman friend who promised that when he died he would use the property to take care of his children. This way he side stepped the law. He trusted his friend to do what he wanted with his property after his death, thus the term "ňúTrust' came about.

When you create a Trust you transfer all your property, assets, bank accounts, securities, real estate to a person or persons you "Trust". You no longer own these assets, the "Trust" does. You still have access to all these assets while you are alive. You instruct your Trust to pay out all income to you during your lifetime, and on your death whatever is left would be given to your beneficiaries. You can put instructions in the Trust as to who has access to it. Your property will avoid probate after you die. You will need to appoint a trustee to take care of the Trust and follow it's directions. The neat part is, you can be your own trustee. You can be the person that is responsible for taking care of all of the assets while you are alive. You can still control your assets and decide what you want to do with them. After your death your Trust would be passed on to a successor trustee that was named in your original Trust.

There are many differences with the wording of Trusts and many different types of Trusts. However, there are two basic distinctions the Living Trust and the Testamentary Trust. A Living Trust is created and instated while you are alive. A Testamentary Trust is carried out after your death from instructions given while you were alive. There is also the distinction of revocable and irrevocable Trusts. A revocable Trust can be changed, added to, taken from or stopped at anytime by the person instating it. If the Trust does not specifically state that the Trust can be revoked or amended,then it is an irrevocable Trust and can not be altered, ever.

Trusts can be created for many reasons, but they usually are best for people who have assets over $500,000.00 dollars. Here are some reasons to create a Trust. To run and support a business. Take care of minors. Pay for medical bills. Create a scholarship fund. Hold real estate, cash, securities or property. Avoid probate. Save on Federal taxes. To hold all your assets together for future instructions.

Whomever is appointed as trustee must follow the rules of the Trust and can not go against your instructions. As said earlier, you can appoint yourself as trustee or another friend or family member. Or, you can appoint a corporate trustee. A corporate trustee is usually a lawyer, accountant, bank or trust company that is chartered to be a trustee. They will charge you fees to take care of your Trust. They will also be able to invest your assets in a more educated manner than unqualified trustees.

When a Tust is done right, it will protect your assets in many ways. It can protect your assets from probate after your death. Save on estate taxes. Keep all assets out of creditor's clutches. Keep your property away from a divorcee.

To find a lawyer who can put together a Trust for you, call your local Bar Association for a referral. Ask for an attorney who is experienced in tax and estate planning. Ask for a free conference to interview them. Many attorneys are willing to give you fifteen minutes or a half an hour free consultation. If you feel they are experienced and you want to do business with them have them prepare a plan for your Trust. You should always get a second opinion on this plan that is developed by paying another attorney, your banks trust department or your accountant to review it. After all, you want to make sure that it is done properly, legally and to your best benefit because you will be transferring your property to it. It is well worth the money to make sure you are not getting ripped off.

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