Trusts
Trusts have been used for thousands of years. Still, they did not become popular estate planning tools until recently.
A trust is a written agreement that names someone to be responsible for managing property for the benefit of others. As far as the law is concerned, a trust is a distinct, separate, entity.
The usual actors of the trust include:
- Settlor or Grantor - You, the person who creates the trust.
- Trustee - Usually you. This is the person who agrees to manage your property as the trust agreement directs.
- Successor Trustee - You can name more than one successor trustee, in order, or even jointly, creating co-trustees who must act together or as you designate.
- Beneficiaries - Those who will receive the income and or principal from the property in the trust at your direction.
For your trust to function properly, your property must be transferred to the trust. Think of it this way. If you purchase a safe for your belongings and you do not put those belongings in the safe, the safe can't work. The same is true of trusts. You must "fund," or to be more specific, re-title your assets into the trust for it to work.
It is a popular misconception that assets funded into a revocable trust are no longer under the control of the trust makers. Because you are the trustee for your trust, you remain in complete control while avoiding probate and saving time, stress, and cost for your loved ones.
For those of you that already have a trust but are unsure if your assets have been transferred to the trust, Attorney Patrick will review your situation free of charge in the initial consultation.
A trustee nominated to handle your trust estate has a fiduciary duty to follow the directions of your trust structure. You need someone in place that can handle this responsibility. Depending on the type of trust structure and your circumstances, you, and your spouse, if appropriate, are the initial trustees of the trust.
For a husband and wife scenario, it usually appropriate for the spouse with capacity to continue on as trustee of the trust when the other is unable to do so. If you are not married, children or close family can usually handle the responsibility of successor trustee.
Some important attributes of a good successor trustee candidate include:
- Trustworthiness as there is generally no oversight of your trustee's action.
- Fiscally responsible so as to handle your financial affairs appropriately.
- Easy to communicate with as necessary.
- Depending on the goal of trust, proximity may be important.
What is most important, is that your successor trustees be the best choice for your estate. This process is not about making people feel equal. It is about assuring your wishes are followed when you no longer have a say in the matter.
If you have questions about trusts of any type, contact Michigan trust attorney Dean E. Patrick at 248-807-0470 for a free initial consultation.
