Most people find that the convenience, privacy, and flexibility of a trust make it a better option for planning their estate than using a last will and testament alone. If you are considering creating a trust for yourself or your family, here is what you can expect as you create, maintain, and use this legal tool:
How Your Trust Will Operate:
- Every trust has a trustee. This person oversees and manages the trust. When you create your trust, you choose who the trustee is, whether that person is yourself or someone else.
- Your trust will have at least one beneficiary. Your beneficiaries can be individuals, groups, or organizations.
- Your trust owns the assets you title in its name. Instead of keeping your accounts, house, real property, and other assets in your name, you retitle them in the name of your trust, or make the trust their beneficiary. Then, when you pass, the trust owns those assets instead of you, although you still have control over them while you are alive.
- Your trust must abide by a legal trust agreement, which you set up at its creation. Even if you, as the trust’s creator, should die, the trust must follow these prearranged rules. The trust agreement is what allows you to use the assets in your trust for your specific purposes.
The Benefits Your Trust Will Give You:
People create trusts for various reasons, with goals that are specific to their lives. Whatever kind of trust you are creating, and for whatever purpose, here are some of main benefits your trust offers you:
- Your trust allows you to control when or how someone uses your funds. There are many reasons for restricting how someone can use funds. They may be incapable, too young, or too inexperienced to handle money, or they may have a history of making bad decisions. This is one of the greatest benefits of trust. It is the only estate planning tool that gives you the option to place ongoing requirements on the person receiving the money.
- Your trust allows you to set aside assets for a specific purpose. This is another great benefit of a trust that a last will and testament cannot offer you. You can accomplish a variety of goals, such as:
- Set aside funds to make a gift or provide ongoing funding to a charity, organization, or cause (charitable trust),
- Provide funds for a loved one with disabilities without interfering with their government funding (special needs trust),
- Provide ongoing care for your spouse after you die,
- Cast a vision for your family, such as funding an annual family vacation to uphold the value of prioritizing family relationships.
- Your trust allows you to avoid probate. When you create a trust, you retitle and transfer your assets into the name of the trust (see more about this in the section below). This process is called trust funding, and it means that when you die, you do not own anything. Instead, the trust owns your assets, although you remain in control of them until your death. Because you don’t own anything, there is nothing to go through probate, and your family will avoid the drawn-out and cumbersome process.
- Your trust allows you to distribute your assets privately. Because a trust is a legal entity that is not overseen by the courts (like a will is with the probate process), it does not go on public record. Only you (the creator), the trustee (whomever you appoint to oversee the trust), and your beneficiaries will have access to the trust details.
What Your Trust Will Require of You:
Creating your trust is only the first step. Once your trust exists as a legal entity, you must then fund your trust for it to work properly. Funding your trust means tying your assets to your trust, so that when you pass, your trust can do what you have instructed with those assets. While we, as your attorney, can help you create and notarize your trust, we cannot fund the trust for you. So, after your trust is created and executed, we will give you an organized list of next steps about how to fund your trust. These steps include:
- retitling your real property,
- listing your trust as a beneficiary on your financial accounts,
- assigning personal property, and more.
While it does take some time and effort, it is not as complicated as it may sound! We will help you in any way we can and advise you along the way if you have any trouble completing these steps.
Disclaimer: The information you obtain in this post is not, nor is intended to be, legal advice. This blog shares general best practices when navigating Virginia or West Virginia law, but you should consult an attorney for advice regarding your individual situation.