Establishing a Trust for Estate Planning Purposes
The use of trusts to pass on property is generally encouraged as a way to avoid the costly and time consuming probate process. If a person can put together a well thought out estate plan, he or she can pass on most if not all his property through the use of trusts. There are two main types of trusts: revocable and irrevocable. Other trust designations usually fall under one of these two types.
How a person chooses to set up the trust is a matter of preference, with the best choice made after consultation with an experienced estate planning attorney. The person seeking to establish the trust, known as a settlor, can choose to set up the trust during his lifetime, or include it as a provision in his will. When the settlor establishes a will while he is alive, it is known as an inter vivos trust, and if the trust is established at the death of the settlor, it is known as a testamentary trust.
An inter vivos trust can be established by the settlor formally declaring that he holds property for a beneficiary in trust. The settlor can serve as the trustee and the beneficiary of an inter vivos trust. The settlor can also decide whether the trust should be revocable or irrevocable. If the trust is irrevocable, the settlor will not be able to make any changes to the trust provisions or otherwise do away with an established trust. If the trust is revocable, the settlor can make any changes he deems appropriate, including changing the designated beneficiary.
While settlors can choose to make an inter vivos trust revocable, it may not always be the best approach to take. The fact that the settlor can take back the trust property at any time usually results in the property in the trust been seen as belonging to the settlor. This can make a difference for settlors who may be seeking to qualify for certain government benefits, but are found ineligible due to having too many assets.
A testamentary trust on the other hand can only be created at the death of the settlor. The settlor usually does this through a will, although this is not the only way to do this. Because testamentary trusts are created when the settlor dies, it is not possible for the settlor to revoke the trust. Testamentary trusts are therefore irrevocable. Since settlors cannot serve as trustees over testamentary trusts, the settlor must take the time to choose a suitable person who can serve as a trustee and ensure the settlor’s intent is followed.
Drafting a trust agreement or other estate planning documents should not be done lightly and should not be done without legal assistance. Using an online form or a combination of forms without understanding the legal terms used or the legal implications can lead to confusion and your estate plan not being honored.
Contact Us for Legal Assistance In Setting Up Your Trust
If you are interested in how you can use trusts to complete your estate plan, you need to contact a knowledgeable trusts attorney at Meyer & Spencer, P.C., an estate planning firm with offices in Pleasantville and Mahopac, New York, serving Westchester and Putnam Counties. Reach out to us today for help.
Resource:
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