Many people have heard of a “Trust”, at least enough to know it’s important. But how many of us actually know what a trust is, let alone if we need one – and, if so, what it means to create one?
While there are large number of different types and names of trusts, a trust is simply a contract between two parties to benefit a third party or class of different parties.
A trust is created by a grantor, administered by a trustee and provides benefits to a beneficiary or beneficiaries.
Let’s unpack that a little. Here are a few reasons why you might want to create a trust:
A trust allows a grantor to determine how his or her assets will be distributed to their loved ones.
Assets can include cash, stocks, bonds, real estate, brokerage accounts, insurance policies and personal property.
A trust allows descendants to avoid probate.
After a death, a probate court will properly prove the deceased’s will and distribute assets accordingly. This is a potentially long and expensive process. A trust allows descendants to bypass the probate court and gain access to assets and property much sooner.
A trust also allows grantors to be detailed about the distribution of their assets.
These benefits can be anything. For example, a grantor can distribute money in small portions to a descendant that manages money poorly. Alternately, a grantor could choose to set aside certain amounts for a descendant’s college funds.
Those with a trust gain spendthrift protection.
A trust can protect the assets belonging to beneficiaries (i.e. family, charities, friends, et cetera) from creditors, predators and sometimes their own poor financial habits.
A trust is more effective than a will in a debate over assets.
If there are disagreements on the distribution of the assets after a death, a trust holds up stronger than a will in those negotiations.
The most common type of trust is a “revocable,” or “living,” trust. A revocable trust allows the grantor to change or take out any portion of the trust for the duration of their life. Upon the grantor’s death, the trust becomes irrevocable.
Other types of trusts you might consider are: charitable; special needs; domestic asset protection; pet; and more.
If we’ve got you thinking about creating a trust, then it’s time to contact Hughes Law to begin a consultation.
Attorney Dustin Hughes can help you determine if your situation calls for a trust and, if so, what kind. We will guide you through the process and be there to answer your questions, big or small.
In honor of the World Cup, for the month of July, Hughes Law is donating one soccer ball to children in the western rural (bush country) of Kenya for every new trust client. We look forward to serving you…and the people of rural Kenya!