What is a trust estate?

The property transferred to a Trust becomes the Trust Estate. A Trust Estate consists of all of the property, rights and obligations that are transferred to the Trust. Management of the Trust Estate is done in accordance with terms and conditions of the document creating the Trust.

Who should have a trust?

You should discuss with an attorney the advantages of a Trust over a Will (even with a Will creating a "Testamentary Trust") if:

You are the parent of minor children

Privacy is important to you, your business or your family
You own real property, in particular any property outside of your home state

Your estate has a gross value exceeding $1,000,000

You want to avoid conservatorship or probate

A Trust in NOT necessary for everyone, and some lawyers prefer to have matters go through probate, but it does makes sense to discuss it.

When should I create a trust?

The only time that you can prepare and implement a Trust and an estate plan is while you are living and have the legal (i.e., "mental") capacity to enter into a contract. If you become unable to manage your own affairs or suffer from some other disability which affects your legal capacity, your trust may be effectively challenged by those who may assert that you lacked capacity when the documents were created, or that you were subjected to fraud, coercion or undue influence during the creation and implementation of your Trust.

The best time to discuss the need for a trust and its role as part of a comprehensive estate is, again, to plan with an attorney now while you have the capacity to do so.

How is a trust helpful in estate planning?

A Trust, when properly drawn and "funded", can be extremely helpful in many situations such as:

Avoiding a conservatorship. If property is held in a trust, a successor Trustee can take over management, without the delay and expense of going to court to appoint a "conservator" to manage the property, if the Trust Creator becomes disabled.

Avoiding probate. A properly drawn trust is a separate entity that does not die when the its creator dies. The successor Trustee will take over managing the Trust estate and pays both bills and taxes and promptly distributes the trust assets to the beneficiaries. This is done without court supervision, and only if the trust agreement gives the Trustee that power.

To maintain privacy. Unlike wills, Trusts are generally private documents. Your neighbors and the public would be able to see and how much you had and who your beneficiaries were under a Will but, in most cases, not with a Trust.

To help keep certain property separate from other property. For example, if you want your daughter to get your vacation home, and your son to get your house in the suburbs, if you create a separate Trust for each property there is no question of commingling or who gets what.

In many estate plans, the Trust is the main tool used to control and manage property. A Trust continues on despite the incapacity or death of the grantor. It determines how a Trustee is to act with respect to the Trust estate. It determines the distribution of property following the death of the grantor. A Trust, therefore, is the major estate planning tools used for a grantor's property so that court interference in the event of incapacity or death can be dramatically reduced.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.