A major reason as to why people choose to create a trust is to gain peace of mind. Should you become ill or disabled, it provides a legal method of managing your assets even after death. For most, the goal of a trust is to reassure individuals that their assets will be legally protected and able to provide for their family and their future descendants.
Within a trust, a trustee is named and then held responsible for managing the trust. A trust administrator can be one person, a group, or an organization. When choosing a trustee, it’s important to consider the structure and goals of the trust. The trustee can take over managing a trust's affairs and any beneficiary provisions put in place. Besides maintaining records of assets, paying taxes, and providing reports to the beneficiaries, trustees are legally bound to the instructions of the trust.
When properties are held in trust, they are no longer part of the individual’s (grantor) accumulated assets. Transferring properties to a trust can reduce the estate taxes before the properties are distributed to the heirs. Trusts also protect assets against legal action, such as probate, where the trust can be challenged.
Two main reasons for challenging the legitimacy of a trust include:
- Claims that the grantor was incapacitated when setting up the trust.
- Alleges the grantor was under duress and undue influence when authorizing the trust.
Trusts Preventions and Provisions
Unfortunately, family feuds do occur over sentimental or monetary items. While the grantor cannot prevent all disagreements, the trust can help to clarify and carry out what is left to each beneficiary. Trusts can be designed to distribute incremental set amounts to a beneficiary. In this situation, the funds cannot be used for any other purpose. The trustee assures the grantor's wishes continue to provide for their heirs. For example:
- Education, professional certifications, or business ventures.
- Distribution when a child comes of age.
- Young children or adults in need of money management assistance.
At Mile High Estate Planning, we understand how overwhelming the thought of creating a trust can be. In the end, a trust allows your wishes to be carried out without court interference, making things easier for you and your loved ones. Contact our office for guidance in planning and creating a trust suitable for you and your assets.