Often there is a perception that you only need to think about trusts if you are managing millions of dollars or major business assets. However, the truth is that different options may benefit different people, and they do not need to be expensive to set up and maintain.
A Lombard trusts lawyer could examine your situation and explain how a trust could help to meet your goals for the future. Regardless of what you want, knowledgeable trusts and estates lawyer can work with you to create a plan to make it happen.
One reason people may find trusts confusing is that the word trust may refer to a relationship, a document, an entity, or all of these. Essentially, a trust is created when one person, often referred to as the grantor or trustor, transfers ownership of the property to another person, the trustee, to hold for the benefit of a third person (or people) known as a beneficiary.
The trustee is supposed to manage the assets in the trust with the good of the beneficiaries in mind. This is known as a fiduciary duty. The original owner of the property may serve as trustee, but that person still has a fiduciary duty to take actions solely for the benefit of the beneficiaries rather than for any personal objectives. The original owner of the property may also become a beneficiary. The trust itself is considered a legal entity such as a corporation and the person often must pay taxes on any income earned.
Although trusts are commonly associated with planning for management of assets after someone’s passing, living trusts are rapidly gaining in popularity. This option is frequently used to avoid probate.
With this option, assets are transferred during the grantor’s lifetime. When the grantor dies, the trust continues so that the assets within it do not need to be probated. A living trust may either be created as revocable or irrevocable and a Lombard trusts attorney can explain the difference and help determine which one may be favorable.
Another option is a testamentary trust. With this option, the terms are established in advance, but it is not actually created until the grantor dies. At that point, the property is transferred. This type is often included in a will.
A testamentary trust enables the grantor to spread out or delay payment of assets or specify conditions for beneficiaries to receive funds or property. For instance, a mother might specify in her will that, when she dies, her assets should be held in trust and managed for the benefit of her children until they reach the age of 21, but that they may receive funds before age 21 if those funds are used for college or other educational expenses.
Although some people set up trusts with a bank or other financial institution as the trustee, it may also be established with a family member as trustee to reduce costs. It is possible to set up a trust as a complex entity to achieve multiple objectives or in a simple form that may be managed by family members.
Although the creation may involve some initial planning, it could save a great deal of time and money in the future. To learn how a Lombard trusts lawyer could help, call now for a consultation.