If you’ve asked yourself is it best to set up a trust with an attorney or do it yourself, you’ve come to the right place. Setting up a trust can be a complicated matter. For most individuals, an attorney is critical to help form a trust. From helping you define your goals, cultivate stewardship, and offering expert advice, there are many benefits to enlisting an attorney if you want to set up a trust.
What is a Trust?
You may have heard of a trust before but not fully understand what it is. In many ways a trust is like a will with a key difference being that a trust can take effect before your death, after, or if you become incapacitated. Some core functions of a trust include:
- Transferring property
- Minimizing estate taxes
- Preserving assets for minors until they become adults
- Benefiting a charity
Why Set Up A Trust?
Aside from the core functions listed above, trusts can be an excellent way to continue supporting someone who may be incapable of managing their money. This could be a minor or someone living with disabilities. Through creating a trust, you can ensure that they will be supported even when you are no longer able to help them. In a similar vein, if you become unable to care for yourself, a trust can help preserve your assets and make sure they are able to continue supporting you.
Getting Specific, Staying Flexible
One of the biggest draws of a trust, and why it is so popular for estate planning, is that you can be very specific about how your assets are distributed. In the trust, you can describe how, when, and whom your assets are distributed. Over the years, many special-use trusts have been established, such as charitable giving and tax reduction. Additionally, your trust can address incapacity cases if you were to have a stroke or develop Dementia or Alzheimers.
Trusts excel when it comes to flexible deployment. You can appoint a trustee to oversee the distribution of your assets, which in many cases can prove invaluable. Further, trusts offer many ways to protect beneficiaries from creditors and manage state income taxes.
Trustees, Trust Property, Beneficiaries: What!?
It’s not just jargon. When it comes to crafting a trust, words matter. This makes having an attorney that much more valuable. Attorneys understand what language must be used for trusts and how to effectively express your goals. Still, if you want to create a trust, you will need to familiarize yourself with some key terms that underlie what a trust is and how it works.
A trustee is a critical person in your trust. This person has the role of managing assets in the trust on behalf of your beneficiaries. They will make sure all outstanding bills and taxes are paid and that important legal matters are addressed. You can name one person the trustee or you can name several people in order of preference. Whomever you appoint to be your trustee, make sure that they understand the structure of the trust, their duties, and where assets are located.
Trust property refers to the money and/or assets in the trust. A trustee controls the trust property and must use it for the benefit of the beneficiaries.
Beneficiaries are the individuals and/or organizations that benefit from the trust property.
What are Common Types of Trusts?
Trusts champion flexibility and cover a broad range of cases. Still, trusts fall into two main types: revocable and irrevocable.
What is a Revocable Trust?
A revocable trust, and more specifically, a revocable living trust, is the most common tool that estate planners use. It is similar to a regular account in the sense that you still fully control your assets. With this type of trust, you can:
- Buy, sell, and trade assets
- Move assets in and out of the trust when you want to
- Put in place additional controls and designees to protect and deploy your assets
- Change the trust in any way and at any time you wish while you are alive
- Revoke the trust entirely
What is an Irrevocable Trust?
An irrevocable trust can be customized in many ways that a revocable trust can be. However, an irrevocable trust cannot be changed or revoked after the agreement is signed. A potential benefit of an irrevocable trust is that when certain conditions are met assets can be removed from a trustee’s estate. This potentially reduces an estate’s value and the associated tax liability.
Why Not Choose a Will?
Often, basic estate planning starts with a will. Wills can be a great tool to distribute your assets once you pass but are far less useful in the case that you become incapacitated. Unlike trusts, wills only take effect after your death and must be authenticated by a probate court. The probate process is known to be lengthy and can involve additional costs. With a trust, you bypass the probate process and have much more flexibility about how and when your assets are distributed.
Are Trusts Expensive to Set Up?
While trusts are very useful tools, they can be expensive to set up. Whether you set up a trust yourself or hire an attorney, you should set aside some quality time to think through exactly how you want your trust to function. After all, there are a lot of options you can pick. If you do seek the expertise of an attorney, it will benefit you greatly to have done some research on trusts and to have thought through your goals. This not only helps your attorney better understand how they can help you, but this can ultimately reduce the cost of setting up your trust.
Set Up a Trust Today
So, is it best to set up a trust with an attorney or do it yourself? Well, we’re a little biased but we think it’s always better to hire an attorney. At the Law Offices of Paul Yee, we are well-versed in many types of trusts and can help you create a trust that will truly support your life and the lives of your beneficiaries. For more information, please visit our website or give us a call at 626-799-490.