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YOUR ATTORNEY FOR TRUSTS
WHAT IS A TRUST?
A Trust is a legal document that sets up a fiduciary relationship. In that relationship are a trustor, a trustee, and a beneficiary. The trustor grants the trustee the right to hold the title to assets for the benefit of the beneficiary.
Trusts are established to provide legal protection for the trustor’s assets. Trusts also ensure those assets are distributed according to the wishes of the trustor. Trusts are designed to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes. In the world of finance, a trust can also be designed to be a type of closed-end fund built as a public limited company.
There are trusts the are in effect when the trustor is still alive. These are Living Trusts. There are trusts that do not take effect until the trustor has passed away. These are called Testmentary Trusts. Testamentary Trusts are established through a person’s will.
When trusts are created, they are created by settlors. This is typically an individual (trustor) along with their lawyer. The lawyer assists in guiding the trustor as they decide how to transfer parts or all of their assets to trustees. These trustees retain the assets for the beneficiaries of the trust. The rules of a trust greatly depend on the terms on which it was built. In some areas, it’s possible for the older beneficiaries to become trustees. For example, in some jurisdictions, the grantor can be a lifetime beneficiary and a trustee at the same time.
The Features of a Trust:
- Determines how a person’s money should be managed and distributed.
- Helps avoid taxes
- Helps avoid probate costs
- It can protect assets from creditors
- It can define the terms of an inheritance for beneficiaries
- It can provide for a beneficiary who is underage
- It can provide for a beneficiary who has a mental disability that prevents them from being able to manage finances.
- The beneficiary will receive possession of the trust once they are deemed capable of managing the assets on their own.
WHAT HAPPENS IF I DON’T CREATE A TRUST?
- Funds that are not distributed through a trust are taxed.
- Assets may be divided among beneficiaries at the will of the court.
DO TRUSTS HAVE DISADVANTAGES?
- Trusts require time and money to create.
- Trusts cannot be revoked easily.
- Settlor (a.k.a. Donor or Grantor): The person that initiates creation of the trust and adds assets to the trust.
- Trustor: The creator of a trust.
- Trustee: The person in charge of the trust. The trustee executes the will of the Settlor.
- Beneficiary: The person (or group) that receives the assets of the trust.
- Fiduciary: Base on or in the nature of trust and confidence.
- Grantor: The person who grants the assets to the beneficiaries.
More Questions? Contact us today:
Williams, Williams, & Bembenek P.C. is fully licensed Central Illinois law firm equipped to provide you with all the Estate Planning services you need for peace of mind. The law firm has provided guardianship and conservatorship for their clients in the Peoria Tri-County and surrounding areas for over 50 years.
While no one wants to think about their own death or disability, creating an estate plan is one of the most important steps you can take to protect your money and family finances. Proper estate planning puts you in charge of your finances and can also relieve your loved ones of the expenses, delays and frustration that come with managing your financial affairs when you die or become disabled.
Contact our experienced lawyers for a free initial consultation or more information regarding:
- Asset Protection
- Elder Law
- Estate Planning
- Guardianship & Conservatorship
- Living Trusts
- Living Wills
- Powers of Attorney
- Tax Planning
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