What Is A Trust And Do I Need One?

You may have heard someone tell you that you need a trust. Some attorneys believe that every person who walks the earth should have a trust, however I believe it is a more nuanced decision that should be driven by the client’s goals.

Our legal system in America is mostly based on English common law, where the concept of trust was used during the Middle Ages when a landowner went to fight in the Crusades, and transferred his property to another person for safekeeping. Sometimes when he would return, the caretaker would try to keep the property, and the Crusader’s rights could be restored as a matter of equity. Thus the concept developed, and the laws surrounding trusts continues to develop today. As in the Middle Ages, it is essentially a contract.

Trusts today have many benefits, but they are not for everyone.

AVOID PROBATE

Probate is the court process in which property is passed on to heirs, there may or may not have been a will. Any property that is solely is your own name, with no beneficiary named, has to go through the probate process. It is a court-supervised transfer of property.

In many states, the probate process can be quite expensive and drawn out. To accomplish this goal, all property must be in the trust.

SAVE ON TAXES

For clients facing estate tax, this is a concern. An irrevocable trust can move assets out of your control and out of your tax liability.

PRIVACY
Probate is a public function and generally information is publicly available. You have to publish notices for the majority of estates, and the matter can even be searched online by name.

SIGNIFICANTLY LESS LITIGATION

The terms of the trust may vary, but often the rights in the trust are skewed towards the interest of the person creating the trust. This can be a great benefit when you anticipate that there might be unhappy beneficiaries, or when you have a lot of restrictions on the transfer of property.

YOUR TRUST CAN TAKE THE PLACE OF POA AND WILL

Because the trust can control property when you are healthy, disabled, or deceased, the trust may eliminate your need to have a will and power of attorney.

-Heather L. Sunderman

 

Disclaimer: The content of this blog is intended for informational purposes only. It is not intended to solicit business or to provide legal advice. Laws differ by state and jurisdiction. The information on this blog may not apply to every reader. You should not take any legal action based upon the information contained on this blog without first seeking professional counsel. Your use of the blog does not create an attorney-client relationship between you and Mirsky Law Group, LLC.