What you Need to Know about Trusts
A Trust is a legal arrangement in which a certain amount of property or assets is held by a person or entity, such as a bank, for the benefit of one or more other people. Knowing the ins and outs of a trust and how it can be beneficial to you and your family is a must before setting one up. Talking with the lawyers at Robinson, Seiler & Anderson in Provo can help you to figure out how a trust would work best for you and your situation. Below we have gathered some information on trusts to help you get a better idea of how they can work for you.
Why you Need a Trust
While there are a variety of reasons to create a trust we have come up with the most common reasons a trust could be helpful in your situation.
- To maintain control of assets in the event of incompetence (if you become unable to manage your assets due to a decline in health or mental fitness)
- To save on estate taxes
- To avoid probate
- When significant amounts of assets are involved, Trusts may also be established to maintain control over assets even after the original owner has died, allowing the person who created the trust to choose where and to whom the assets can be used.
Participants in a Trust
There are 4 participants in a trusts,
- The Grantor, the person who creates the Trust (also known as “donor,” “settlor,” or “trustor”)
- The Trustee: the person, people, or entity (such as a bank) that agrees to hold the property or assets (the grantor may be the Trustee)
- The Principal: the property or assets themselves, including money, which is held in the Trust and managed by the Trustee
- Beneficiary: the person or people who ultimately receive the property or assets in the Trust.
Different Types of Trusts
There are a variety of types of trusts for you to choose from. Each one caters to an individual’s unique needs.
- Living Trusts: when a Trust is created and then immediately become effective, it is known as a “Living Trust.”
- Testamentary Trusts: when a Trust is created and then does not become effective until after your death, it is known as a “Testamentary Trusts.” In the case of testamentary Trust, you, as the person creating the trust, are called the “testator.” Testamentary Trusts are often created within Wills.
- Revocable Trusts: you retain ownership and control of the property in the Trust and can change the terms of the Trust, including the Trustees and beneficiaries.
- Irrevocable Trusts: you give ownership and control of the property in the Trust to others (Trustees) and therefore no longer own or control the property, thus making you unable to enact changes to the Trust.
Know the facts about Trusts can give you a better idea as to how they work and what type of trust you may need. Schedule a consultation with one of our experienced lawyers at Robinson, Seiler & Anderson in Provo to learn more.