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Home » Resources » Frequently asked questions » Living Trusts – Frequently Asked Questions

Living Trusts – Frequently Asked Questions

    • What is a trust?

    • A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, also referred to as a Grantor or Maker, who transfers property to a Trustee. The Trustee holds, invests, and manages that property for the beneficiaries designated by the Settlor in the trust agreement.

    • How is a Living Trust different than other types of trusts?

    • All trusts fall into one of two main categories – testamentary or living trust. A testamentary trust is one that does not become active until the death of the Settlor. Typically, a testamentary trust is triggered by a provision in the Settlor’s Last Will and Testament. A living trust, formally known as a “inter-vivos” trust, activates as soon as all of the formalities of creation are complete, and the trust is funded. Living trusts can be further divided into revocable and irrevocable living trusts. As the names imply, a revocable living trust can be revoked or terminated by the Settlor at any time and for any reason whereas an irrevocable living trust cannot be revoked or terminated by the Settlor after the trust becomes active.

    • How does a living trust fit into my estate plan?

    • A living trust can help achieve a wide range of estate planning goals; however, some of the more common uses for a living trust include:

      • Avoiding probate
      • Asset protection
      • Incapacity planning
      • Medicaid planning
      • Planning for parents with minor children
      • Special needs planning
      • Pet planning

    • What are the duties of a Trustee?

    • The Trustee of a trust administers the trust which requires the Trustee to take on a wide range of duties and responsibilities, including:

      • Following all trust terms unless they are illegal or unconscionable.
      • Communicating with beneficiaries.
      • Investing trust assets using the “prudent investor” standard.
      • Managing trust assets.
      • Distributing trust assets.
      • Keeping trust records.
      • Preparing and filing trust taxes.
      • Defending the trust against legal challenges.

    • Who should be my Trustee?

    • One of the most common mistakes Settlors make when creating a trust is to appoint someone close to them, such as a spouse or friend, as the Trustee of their trust without taking to time to contemplate the individual’s suitability for the job. Ideally, your Trustee should have experience in the legal and/or financial field because many of the Trustee duties require a knowledge of law and finance. Instead of simply appointing someone you “trust” as your Trustee, appoint someone who can administer the trust efficiently and economically. You may even wish to consider appointing a professional Trustee.

    • What does it mean to administration a trust?

    • A trust agreement is the name of the document used to create a trust. Within the trust agreement are the terms, created by the Settlor, that dictate how the trust will operate. Trust administration refers to the Trustee’s job of overseeing the terms of the trust in action. Generally, the more complex and/or valuable the trust assets are, the more time consuming and complicated it is to administer the trust.

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Testimonials

Client Review
August 19, 2020
    

“My mother told me about the Collins Law Group and I must say, the entire experience has been a real pleasure. Although I was nervous at first, the Collins Law Group staff put me at ease with their friendliness and knowledge. I didn’t realize how hard it could be on your family and loved ones left behind if you die without any planning or directions in place for them. My biggest concern was making sure my elderly mother would be provided for and taken care of if something happened to me. I have been a caregiver for her for 12 years, so this planning was crucially important. I had previously made a living trust for myself on Legal Zoom but there is no comparison to the level of service and professionalism that Collins Law Group embodies. Attorney Collins and her staff provides excellent service and it will take a large burden off of my family when they need guidance at the time of my passing.”

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-Ms. Jones

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