Sunday, July 7, 2013

Why Should You Set Up A Trust?

There are many, many types of trusts but for the purposes of this post we are talking about simple trusts, either created by you during your lifetime or created upon your death through your will (see earlier posts regarding wills).

An inter vivos trust, or living trust, is created while you are living.  This is simply set up for you to transfer your property to.  The trust will have a trustee, who controls all of the property in the trust, and a beneficiary.  You many want to set this up for a couple of reasons; the biggest reason is to save your family the trouble of dealing with the probate process upon your death.  Trusts are also more difficult to challenge than a will, though certainly not impossible, and may be a good idea if you expect someone to challenge your will.  Keep in mind, however, trusts can be expensive to maintain and will have certain tax consequences that you should consider prior to creating a trust.

You can also create a trust through your will that will be created upon your death.  You would typically do this if you want to give your property to someone, such as your young children, but want someone more mature, experienced, etc. to handle that property.  In that case, you can set up specifics about how you want the trustee to distribute the property, such as a for education or living expenses, or a certain amount at certain times.  The same consequences mentioned above still apply to this type of trust as well.

If you are looking to create a trust, consult with an attorney to determine the best plan for you and your property.