Last week we discussed the need for proper estate planning, for some, this may mean a will, for others, a trust. A trust agreement is a document, that like a will, speaks to your last wishes about your assets after you pass on. Your trust will lay out your assets and to which beneficiaries you wish to bestow them. Unlike a will, however, a trust can possibly provide for reduced estate tax liability and the avoidance of probate.
If you are looking to set up a trust there are seven basic components:
- You. You will be known as the trustor, though you may sometimes see the terms settlor or grantor.
- What is your objective? There are different types of trusts to achieve a variety of specific estate-planning objectives.
- Types of trusts. When you’re setting up a trust, you will need to decide what type of trust you want and make sure that it will carry out your actual intentions.
- Property. Once you place property into a trust, that property is now considered to be trust property.
- Beneficiary. This person or people benefit(s) from the trust in some way after you pass.
- Trustee. The person in charge of the trust is known as the trustee. The trustee needs to understand the rules for the type of trust he is managing to make sure everything you intended is carried out.
- Rules. Finally, some of the rules that must be followed are inherently part of the type of trust used, while other rules depend on what is specified in the trust agreement. Always be aware of state and federal law in the construction of and disposition of your trust.
Estate planning is important in ensuring that your final wishes are carried out in the manner that you determine. Decide whether a will or trust is right for you and start your estate plan. Allen Investigations will be adding document preparation soon, to help you with your estate planning needs.