|
ANSWERS ABOUT TRUSTSWhat is a Trust? What kind of Trusts are there? What is the main benefit of a Trust? Can I Have a Trust for my Minor Son or Daughter? Can
a Living Trust Substitute for a Will? Generally speaking, a trust consists of ownership of property for the use or benefit of someone else. The classic trust is where a person puts ownership of part or all of his or her property into the hands of someone else to be used for another person. Without getting too technical, the "Settlor" of the Trust is the person who owns the property originally. The "Trustee" can be either a bank or financial institution or an individual who uses the property or income for a third person, the "beneficiary". What kind of trusts are there? An "inter vivos" trust is a trust established during the lifetime of the Settlor. A "testamentary trust" is a trust established in a will. There are other kinds of trusts, but this can be a very complex and technical field of the law. What is the main benefit of a Trust? One benefit of a trust is that you can put property or income for the trustee to use for a person who is too young, too unsophisticated, or mentally unable to manage funds or property on his own. A testamentary trust, for instance, is very useful if you have young children. The Trustee can hold the property until they turn 18 or older, or until they have completed college. Can
I Have a Trust for my Minor Son or Daughter? Sure.
Most people correctly feel that someone only 18 years old cannot handle
their own assets, so they set up a trust to handle their child’s
assets until the child turns 21, 22 or even 25. However, when a child
turns 18 he or she is no longer subject to Court supervision and can
live or do whatever he or she pleases. What is a Living Trust? A Living Trust is a document that puts all of your assets into a Trust, a legal entity run by an individual or individuals who are called “Trustees.” Generally speaking, a living trust is a lengthy document that costs thousands of dollars to prepare. Also (generally speaking) a trust of some sort can be a good idea at times if you have a substantial Estate running into the millions of dollars. A Living Trust requires that you put all, or substantially all of your assets into the name of the trust, to be run by the Trustees. There must be considerable follow-up on the Living Trust since - if items are omitted from the Trust- it may all have been a waste of money. You should
even put ownership of your dog and cat into a Living Trust! Can
a Living Trust Substitute for a Will? Generally
speaking, no. A Living Trust is almost certainly not a good idea if your
Estate consists (say) of a house, some money in the bank and some
retirement benefits. Also, if you are married and all of your assets are
held with your spouse as husband and wife, there is virtually no need
for a living trust unless your estate exceeds $650,000.00. The
high expense of a Living Trust ordinarily does not justify the time and
expense to put one together even if you are single. Generally
speaking, a Living Trust is completely inappropriate for people of
modest means. Some lawyers aggressively market and sell Living Trusts with the argument they provide a complete substitute for a Will. However, the assets in a Living Trust remain subject to Pennsylvania Inheritance Tax and (often) Federal Estate Tax as well (if your Estate is over $650,000.00). A Living Trust can avoid probate, but sometimes probate is preferable to no probate at all in that there can be a judicial determination or ruling that the Estate is concluded. In fact, most (if not all) attorneys who market Living Trusts also recommend that you have a will anyway! For more detailed answers on these
|
|
|
