What Is A Trust Fund?
Trusts are becoming a popular tool for anyone, wealthy or not, as a solution in their estate planning. A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. The main reason for creating a trust is to control who receives your assets. Trust funds can be complex and often require the assistance of an experienced attorney to set up. Below are general guidelines you want to consider if you want to open a trust.
How Does The Process Work?
Going to an experienced attorney ensures that your trust is open correctly. The process for setting up a trust depends on several things such as the type of trust you want, your assets, and the beneficiaries. To determine the right trust for you, first identify the reason you want to set up a trust. There are several different types of trusts but four common types are:
- Living Trust: a living trust is created while you are still alive. A common purpose of a living trust is for the efficient transfer of assets to beneficiaries by avoiding probate. Probate is a court proceeding for distributing assets after death. Avoiding probate can save time and court fees, and potentially reduce estate taxes for beneficiaries.
- Testamentary Trust: This type of trust is set up after death according to your last will and testament. Since the terms of a testamentary trust are established in your will, and the terms can be changed at any time up until your death, this trust can be simpler and more flexible than a living trust.
- Revocable Trust: A revocable trust is a living trust that refers to the fact that the terms of the trust can be altered during the grantor’s lifetime.
- Irrevocable Trust: The terms of an irrevocable trust can not be altered after the trust is created.
After considering what type of trust you want to open, you want to decide who the beneficiary and trustee will be. The beneficiary can be a family member, a loved one, or an organization. From there, choose how you want your trust’s assets to be managed and dispersed. Designate a trustee or group of trustees, such as an attorney or trusted relatives, who will uphold the purpose of the trust and handle and distribute the funds according to your wishes. Decide how you want the funds distributed, such as in a lump sum at a certain date or in specific amounts paid out at regular intervals.
Setting up a Trust is only half the battle. The next step is to choose the amount and type of funds to move into your trust. Remember! You are not finished until the Trust is funded. Funding a Trust essentially means you make the Trust the owner of any assets you want it to hold. Trust funds can consist of a range of assets, including cash, real estate, stocks, bonds, artwork, classic cars, collectibles, and family heirlooms. You can place these assets into the trust all at once or make a series of additions and deposits over time.
Would I Benefit From Starting A Trust?
At Gallinger Law, one of our experienced attorneys will be able to guide you through the process of opening the adequate trust correctly. Trusts can be beneficial for all sizes of estates. Setting up a trust can be complicated. If you want to create one and have questions about the process, consider reaching out to Gallinger Law for a consultation today. We have 17 years of experience helping Long Beach and surrounding communities with estate planning, business law, nonprofit applications, and immigration services. Call 888-255-9147 to make an appointment.