What is a Trust?
A trust is a legal arrangement in which a person or company manages property for the benefit of another person or persons called beneficiaries. A trust may be set up within a will to take effect only after death, or it can be effective during a person’s lifetime. Perhaps the most common trust is the "Revocable Living Trust," which has become very popular. “Revocable” means that it can be changed, or amended and even terminated at anytime by its creator. The term “living” refers to the fact that it was formed during the lifetime of the person who created it.
The decision to create a trust, and the type of trust to be utilized, should be determined through consultation with your attorney and accountant. There are two steps: preparation of the paperwork establishing and executing the trust, related wills and powers of attorney, and funding of the trust. Funding is done by the transfer of assets into the trust.
Both steps are necessary in order to obtain all of the benefits your trust is designed to provide. As new assets are acquired, they should be acquired in the name of the trust. A trust can be complex—it’s not for everyone—but it can provide a flexible and valuable estate planning tool.
The Advantages of a Trust
- The use of a trust can avoid the cost and delay of probate.
- Trust administration can be a private proceeding, as opposed to the public nature of a probate court proceeding.
- A trust provides an uninterrupted connection of the management of estate assets.
- A trust can limit or even avoid estate taxes.
- A trust can hold onto property longer than a will and therefore gives you more control even after death.
- A trust allows for you to have access to and flexibility in managing the property.
- A trust is able to bypass the need for a court-supervised guardian or conservator if mental or physical incapacity should occur, by managing the payments of income and principal. This effectively allows you to benefit from your trust in the event of such incapacity.
- A trust has the power to secure the support of persons in your life. These people may include disabled or handicapped individuals, an elderly parent, a spouse, or even an impaired child.
- A trust has the added benefit of providing protection against creditors and lawsuits.
- A trust is able to provide for a married relative without placing that property in the hands of their spouse and effectively avoiding any claims to the assets by that spouse.
Consulting With a Trust Lawyer
Our Arizona estate planning attorneys at Platt & Westby, P.C., charge reasonable fixed fees to draft trust and related documents. Assistance in funding the trust, including preparation of deeds and other instruments needed for this purpose is provided at our regular hourly rates on an "as needed" basis. Many of our clients choose to perform the funding of their trusts themselves.