Here’s the big picture: A trust is an incredibly valuable and versatile tool to accomplish many of your estate and business planning objectives. Basically, you create a separate legal entity that owns and administers property for the benefit of certain beneficiaries. One or more trustees are appointed to administer the trust pursuant to the document’s precise instructions. They must adhere to the instructions at the risk of being held personally liable. That’s why trustees are called fiduciaries, because they are subject to a higher standard of care in exercising their duties. Because trusts are separate legal entities, they do not “die” like people do. In fact, they can last up to 360 years in Florida! Since they can own virtually any type of property for a very long time without interruption, trusts ensure a smooth transition of family and/or business assets or wealth to subsequent generations. All the while the creator can still retain a fair amount of control over the property far beyond the time of death.
Trusts can also prove to be extremely valuable if employed in connection with estate and gift tax reduction strategies. Tax rates having been higher than 50% in the past and future rates are far from certain. Failure to plan can result in the United States Treasury receiving a large amount of your assets instead of your family.
However, most relevant to everyone is how helpful they are in avoiding probate and avoiding guardianship, which as you now know, can be very time consuming, expensive, not private and dangerously unpredictable. After learning about all of these benefits coupled with the peace of mind of knowing that your assets will be preserved and protected for generations, I hope you see how valuable they are to mostly everyone.
I’m sure it won’t surprise you that there are many types of trusts, with each having unique advantages and disadvantages. Some are excellent for simple family planning. Others are useful for estate and gift tax planning. Still others can be used for current and deferred charitable giving. Finally, trusts are excellent vehicles to integrate into an asset protection plan, thereby taking advantage of both estate planning and asset protection techniques simultaneously.
Given how powerful trusts can be, you have to ensure that they are carefully drafted. Remember, small mistakes often have dangerously large consequences. We strongly advise you to retain the services of an attorney that focuses, exclusively, on wills and trusts, and avoid do-it-yourself products and services at all costs.
Different types of trusts include, but are not limited to: revocable living trusts (also known as inter vivos trusts, or intervivos trusts, living trusts, revocable trusts or lifetime trusts), discretionary trusts, irrevocable trusts, testamentary trusts, grantor trusts, defective grantor trusts, family trusts, business trusts, voting trusts, dynasty trusts, charitable trusts, charitable lead trusts, charitable remainder trusts, special needs trusts, land trusts, pot trusts and general partner trusts.
You should retain the services of a trust attorney, trust and estate attorney, wills and trusts attorney, estate planning attorney or an attorney that focuses on trust law. The administration of a trust is often called trust administration. Trustees are generally entitled to be paid reasonable fees and it’s important to draft trusts with protective clauses (such as appointing a “Trust Protector”) as a cautionary measure to ensure that trustees do not behave improperly. Trust accounts should be monitored to ensure that trust funds are administered efficiently and effectively for the benefit of its beneficiaries.