While most estate plans begin with executing a Last Will and Testament, a trust agreement is often a popular addition once a basic estate plan is established. Establishing a trust should always be accomplished with the guidance and assistance of an experienced trust attorney. To get you started, however, a Loveland trust attorney at Zimmer Law Firm provides some preliminary questions to consider when creating a trust.
- What is your trust purpose? Every trust must have at least one clearly defined trust purpose. Because trusts have evolved to the point where there is now a specialized trust to help meet almost any estate planning goal, narrowing down your goals and deciding on a clear purpose for your trust is the first step in creating your trust. Every trust must have a trust purpose that can ultimately be referred to by the Trustee, or even a judge, when making critical decisions relating to the trust. In the event a term is ambiguous, or your directions are unclear, the trust purpose will serve to guide your Trustee (or a judge) when interpreting your intentions.
- What type of trust do you need? All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust, activates during the Settlor’s lifetime. Living trusts can be sub-divided into revocable and irrevocable living trusts. If the trust is a revocable living trust, as the name implies, the Settlor may modify or terminate the trust at any time and for any reason. An irrevocable living trust, on the other hand, cannot be modified or revoked by the Settlor at any time nor for any reason once active. Testamentary trusts are always revocable because the Will that triggers activation is always revocable until the Testator’s death. There are also specialized trusts, within those broader categories, that are used to achieve very specific goals. For example, if you are part of a blended family and you wish to provide for your current spouse while still preserving assets for children from a previous marriage, a Qualified Terminable Interest Property, or QTIP, trust might be your best choice.
- Who is the right person (or entity) to appoint as Trustee? The duties and responsibilities of a Trustee are numerous and diverse, requiring you to spend a considerable amount of time deciding who to appoint as your Trustee. Given the importance of the job of Trustee, choosing your Trustee should be done with care. Your Trustee is responsible for managing and investing trust assets as well as administering the trust. Ideally, your Trustee should have a legal and/or financial background to ensure that he/she can administer the trust successfully. Choosing a professional Trustee is something you may wish to consider if your trust is moderate to large and/or involves complex terms.
- What trust terms do you need to include? Assuming you are working with an estate planning attorney, your attorney will draft the trust; however, as the Settlor of the trust you will decide on the terms to be used to administer the trust. You will use those terms to decide when assets can be distributed, how assets should be invested, and how much discretion you want your Trustee to have, among other things. As the Settlor, you can include any terms you wish as long as they are not illegal, impossible, or unconscionable.
- How will you fund your trust? Once the trust agreement is perfected, you will need to decide how to fund the trust and transfer those assets into the trust. Almost any type of assets can be used to fund your trust; however, the trust purpose and type of trust created may dictate the type of assets you use. After deciding which assets will be used, those assets must be legally transferred into the trust. This can be extremely simple, as is the case when cash is used, or complex as is the case when real property is being transferred into a trust.
Contact a Loveland Trust Attorney
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about creating a trust, contact an experienced Loveland trust attorney at Zimmer Law Firm by calling 513-721-1513 to schedule your appointment today.