Trusts

WHAT IS A TRUST?

Many people when they hear the word “trust” or phrase “trust fund” get an image of a wealthy family setting aside wealth to be passed down generation to generation. This is a common misconception; trusts are for everyone. Simply put a trust is a legal creation or fiduciary arrangement that allows a third party, or trustee to possess or hold onto assets for the benefit and behalf of beneficiaries.

Trusts and the administration of trusts can quickly become complicated due to states having varying rules and processes overseeing trusts. Trusts are all limited and regulated by federal and state laws. When considering the creation or re-evaluation of a trust from another state it is best to seek the assistance and guidance of an experienced attorney who can help address concerns, generate documents and establish the trust.

REVOCABLE LIVING TRUST

This type of trust is created as an instrument that sets aside assets while you are living, they are managed by a trustee on behalf of the beneficiary for the beneficiaries’ benefit. In recent years this kind of trust has been gaining popularity. Unlike an irrevocable living trust, they can modified with the consent of involved parties allowing for greater flexibility. The biggest downside of this type of trust lies in its possible tax implications. Revocable trusts require a very complex process and it becomes very easy to make a mistake without the direct assistance and guidance of an experienced attorney.

IRREVOCABLE LIVING TRUST

Irrevocable living trusts are often the go-to trust for dividing ownership and assets between a group of people rather than just a single beneficiary (while this is not always the case). Unlike the revocable trust, the irrevocable living trust cannot be easily modified and cannot be done so without proper provisions being placed in the trust at its inception. Withdrawing assets or continuing to use assets within this trust will be taxed through either estate taxes or gift taxes depending on the circumstances. Like revocable living trusts, these require a very complex process and it becomes very easy to make a mistake without the direct assistance and guidance of an experienced attorney.