Law Offices of Anthony J. Montisano, Jr

Trusts

The World of Trusts

There are basically two types of Trusts, the Living Trust, also known as the Revocable Trust or the Inter vivos Trust, and the Testamentary Trust.

Testamentary Trust

A Testamentary Trust is nothing more than a will with various trust provisions contained within the body of the document. Basically, when a person who has a testamentary trust dies, there will first be a probate.  After the probate has been completed the property in the probate estate will pass to the heirs through the trustee, according to the terms of the testamentary trust. These types of trusts were used quite frequently in prior years.  Today, the testamentary trust should be avoided!  There is no estate planning value derived from using such a trust, since you will not avoid probate fees and costs.  Remember, the property must first pass through probate, before it can pass to your heirs.

Living Trust

A Living Trust, which is the most effective type of trust, is a trust created and utilized during your lifetime.  It involves a two step process.  First the trust document must be created; and, second for the trust to be effective, your assets must be transferred to the trust.

Before we discuss how the trust works, lets examine some of the basic terminology associated with this type of trust.

  • Trustor:  The trustor is the maker of the Trust.  Who is the trustor of the trust?  You are the trustor of your trust.
  • Trustee:  The trustee is the manager of the trust.  Who is the trustee of the trust?  During your lifetime, you are the trustee of your trust.
  • Beneficiary:  The beneficiary is the person who receives the benefits of the trust.  Who is the beneficiary of the trust?  During your lifetime, you are the beneficiary of your trust.  When you pass on, those persons whom you have designated as the beneficiaries (children, grandchildren, relatives, friends, etc.) will become the beneficiaries of the trust.  These beneficiaries will receive the benefits of the trust in any manner that you designate.
  • Successor Trustee:  The successor trustee is the person that you will chose, during your lifetime, to take your place when you die or if or when you become incapacitated.  You can chose family members, relatives, friends, or an institution if you so desire.  The important thing to remember is that the person you chose will have complete control over the management of your trust estate, and therefore your choice should be made very carefully.

Creation of the Trust Document

I have been creating trust documents for over 30 years.  My standard trust document, which is over 30 pages in length, contains all of the necessary language to ensure that your property will pass to your heirs without probate, and without any of the delays associated therewith.  Further, our standard trust document contains the necessary language recognized by the Internal Revenue Service to provide the maximum tax benefits for your estate.

Once the trust has been created, the next step, transferring of your assets to the trust, requires your help and assistance.

Transferring Assets to the Trust

As part of your trust package, our office will prepare up to two quitclaim deeds, at no additional cost, for the purpose of transferring real property into the trust.  You will be required to transfer your remaining assets to the trust.  Those assets will consist of substantial bank accounts, out of state real property, interests in deeds of trust, stocks, bonds, insurance policies, money market accounts, certificates of deposit, partnerships interests, your business, and any other assets of considerable value.  Your personal property, unless of significant value, does not have to be transferred to the trust.  Transferring other assets to the trust is a very simple process.

How does this simple process occur?  You will contact the bank, or the institution where your asset is held, and instruct them to change title to the asset, as illustrated below:

  1. Property owned by a married couple and held as JOHN & MARTHA JONES AS JOINT TENANTS, should be changed to JOHN & MARTHA JONES, AS CO-TRUSTEES UNDER REVOCABLE TRUST AGREEMENT DATED _______, 200 .
  2. Property owned by single person and held as JANE JONES AS A SINGLE PERSON, should be changed to JANE JONES AS TRUSTEE UNDER REVOCABLE TRUST AGREEMENT DATED ________ __, 200_.

There is nothing mysterious or magical about making these transfers.  When I assist you in creating an estate plan, I will include detailed instructions on what you need to do to make the transfers to your trust. When you acquire property in the future, you only need to remember that the property should be acquired in the name of the trust, rather than in your name as an individual.  This can be done without an attorney making the transfer for you! You can do it all on your own.

For more information on the type of the trust document that will best suit your needs, call my office. I would be happy to discuss those issues that are specifically related to your family situation.

DISCLAIMER : The material contained on this website is for informational purposes only, and should not be construed as the dissemination of legal advice to anyone by the attorney.  You should always seek the advice of an attorney, who can review and ascertain your legal needs and recommend a proper course of action regarding your situation.