TRUSTS

In General:  A trust is your set of personal instructions that specifies exactly how you'd like your assets to be managed and distributed. The terms of a Trust may be modifiable or permanent. A trust is created by a written document that names an individual or institution to manage the assets placed in trust. In general, there are two types of trusts:

A.     Living Trust
Those that are implemented while you are alive (i.e. revocable living trust or inter vivos trust) and;

B.    Testamentary Trust
Those that are created through your will after you pass away (i.e. testamentary trust).

A living trust is set of instructions (usually revocable) created during your lifetime that outlines how you want your assets to be managed and distributed to your beneficiaries. When you establish a living trust, you register your assets to the trust, and the trust becomes the owner of your assets. When you die, the trust assets avoid probate because the Trust is able to legally continue without your presence.

Cost: A basic Trust for a single person is often drafted for less than $1,000. The cost of a complicated trust will reflect the work involved.

Caution:The transfer of some assets such as retirement funds into a trust could cause a taxable event.

TRUST FUNDING

The drafting of a Trust does not control any of your assets until you have formally transferred those assets into the Trust. To accomplish this transfer, a written document is usually required. Although an attorney may or may not be required to complete this process, it is advisable to have an attorney review the process. The funding process is made much easier if the inventory (Click to access the form) is properly completed at the beginning of the estate planning process.