What Is A Trust?
A trust is a separate entity, like a corporation, to which the person creating the trust (known as the “grantor”) transfers ownership of his or her assets. The trust is created by a written document signed by the grantor which names the trustee of the trust. The trustee then is the person who has the legal authority to manage the assets of the trust. The trust document also designates the beneficiaries of the trust. They are the persons who the trustee can use the trust assets to provide for.
What Are the Differences Between a Revocable and Irrevocable Trust?
A revocable trust is one in which the person creating it (the grantor) reserves the right to change the terms of the trust by amending it at any time during the grantor’s lifetime. The grantor also reserves the right to revoke the trust at any time and take back ownership of the trust assets.
An irrevocable trust is the opposite of a revocable trust. A person who creates an irrevocable trust typically does not have the right to amend or modify the trust terms at a future date and does not have the right to revoke it and take the assets back.
Who Needs a Trust?
There are a variety of reasons that a person would want or need a trust.
Revocable trusts are most often created for the purpose of avoiding probate at the grantor’s death. That is, if the grantor’s assets are owned in the name of the trust rather than the grantor’s individual name, they pass at the grantor’s death outside of probate.
Irrevocable trusts are typically created for the purpose of saving estate taxes. Irrevocable trusts are also commonly used for asset protection purposes such as shielding the trust assets from lawsuits against the grantor. Also, if the assets in an irrevocable trust will pass the grantor’s next generation, the trust can shield those assets from being lost to a child’s creditors or a child’s ex-spouse in the event of the child’s divorce.
The above are all mainstream reasons that a person would want a trust.
What is the Definition of a Declaration of Trust?
A Declaration of Trust not have any particular legal meaning. It is just a title that many Lawyers use to name trusts they prepare. For example the title for a trust might be “Declaration of Trust of John Smith”. But other names are also commonly used for trusts. Sometimes lawyers will call a trust the “Trust Agreement of John Smith” or the “John Smith Living Trust” or other names.
When Does a Trust Become Effective?
A trust becomes effective when it’s signed by the grantor and the grantor transfers property into the trust.
What is the Beneficiary?
The beneficiary of the trust is the person for whom the trust is intended to provide. If I transfer assets into a trust and the trustee is instructed to use trust assets to provide for the health, education, maintenance and support of my children, then my children are the beneficiaries of the trust.
What Role Does the Grantor Typically Have in a Trust?
The grantor’s typical role is to create the trust document which in turn, names the trustee and beneficiaries of the trust. In the trust document, the grantor also includes instructions to the trustee for managing the trust assets and how the trustee is to use them to provide for the beneficiaries.
With a revocable trust, the grantor will typically also name himself or herself as the trustee. Accordingly, the grantor continues to control the management and use of the trust property during his or her lifetime.
Is it Affordable to Create a Trust in Missouri?
Everyone who believes that it’s important to properly plan for their family and to have their affairs in order if one day all of a sudden they are no longer here, should not be deterred by the fees for doing trust planning. The prices lawyers charge for trust planning vary widely across the board based on many different factors. But most people who can benefit by having a trust in place should be able to find a price point that meets their budget for planning that also meets their needs.
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