A Trust is a legal entity, set up to hold assets by an individual or a couple during the time that the creator(s) are alive and competent. It can be changed at any time.
A Will designates who gets what assets, but must go through Probate—a lengthy, expensive, complex legal process. A Trust does not need to go through the time and expense of the Probate process.
The purpose of this legal process is to pay creditors, supervise executor(s) and pass assets to heirs. It is very expensive-with costs ranging from 4%-8% of the “gross” estate for attorney and executor fees. Gross estate means ignoring mortgages and basing costs and fees on the market value of assets.
Probate attorneys are often reluctant as they will not get the probate fees after the testator (creator of the will) dies. These fees are statutory and as stated above and are quite extensive.
The first known Living Trust drawn in the United States was done by Patrick Henry, an early colonist. It has been around for over 1,200 years actually dating back to A.D. 800 as Roman Law and was adopted by the English. The first known Living Trust drawn in the United States was done by Patrick Henry.
Congress has left “certain rights” to the states not granted to the federal government (which would be very difficult to change) and among those is the right to create a “legal entity”, such as a corporation or Trust.
Yes, the Living Trust is valid in all states. A person can have a California Trust holding property in another state.
A typical trust for a married couple which can be divided after the first spouse dies to save on estate taxes and protect the heirs.
The surviving spouse can take all the income and invade the principal for very broad reasons which he or she interprets for their own health, education, support and maintenance-for basically anything he or she needs money for.
Most definitely! If you want to avoid probate, you should have a living Trust whether you are married or not (especially if you own any real estate).
A trust which holds no assets is basically worthless. The ownership of the home and various accounts should be changed to the trust. The attorney that does your trust should help you with this process.
Anytime—as long as you are competent.
Absoluetly!
You can dictate the terms for distribution or have the trustee hold the funds.
Money can be held for his or her benefit by the trustee or a “Special Needs” Trust can be established for him or her.
No. Only the creators can determine the terms. If the trust were defective or ambiguous then the Successor Trustee would have to go to Court for clarification by the judge.
The trust assets can be divided and the trust revoked.
It is a good idea to talk to your attorney every 3-4 years about your particular situation.
If you like—but they can be given a copy of a summary of the trust called the Abstract.
I recommend age twenty-five (25).
Absolutely not. It is a private document.
If you want to refinance your property some mortgage companies (not all) require taking the real estate out of the trust for a couple of days. It can be put back into the trust following the refinance.
No effect. You still use your own social security number(s) when filing your returns.
A good attorney can make sure these concerns are handled.
Yes. Please make sure that the attorney does this correctly to avoid a tax spiral.
No. The trustee can be a trusted friend, fiduciary, bank, or an attorney.
Yes.
Yes.