At its most basic level, a trust is simply a fiduciary relationship where a person, called a settlor, designates a person, called a trustee, to hold something in interest for the benefit of another person, called a beneficiary. In order to create a trust (i.e., become a settlor), you must have capacity to create a trust, the intent to create a trust, definite beneficiary(ies), a trustee with duties to perform, and ensure that if you only have one trustee and only one beneficiary, that those two individuals are not the same person.
Trusts are popular not only because they can be made as flexible or as rigid as you like, but also because there are different types of trusts you can establish.
A trust created during the life of the settlor can be either “revocable” or “irrevocable.” Revocable trusts grant you the ability to retain control of all assets in the trust, allowing you to change the terms of the trust at any time. For instance, if you decide your nephew only gets his trust money if he goes to college, that is a condition you can add to your trust. However, with irrevocable trusts, it is often significantly more difficult to revise the terms of the trust, and may require the consent of the beneficiaries, the court, or a trust protector.
One reason for the creation of a trust is to avoid probate administration, as trusts can provide for the distribution of assets upon the death of the settlor. It can be desirable to avoid probate administration as probate administration can be costly, the case file is public record, and the probate administration process is slower than trust administration.
At Chepenik Trushin LLP, we have given “trust fund baby” a whole new meaning. We understand that your trust needs to be specifically tailored to your and your family’s needs. We understand those needs and will advise you on how to achieve your trust goals the best way possible.