A Trust is an estate planning tool that allows a person to put aside money and other assets that will later be distributed to the beneficiaries named on the trust. It’s the legal agreement drawn up by you and your trust attorney (also known as estate planning attorney) to specify how certain assets will be managed and distributed. Its purpose, like a will, is to think ahead and provide financial support and protection for your loved ones.
A Trust Fund is the legal entity those assets are placed or “deposited” into when the Trust is created. The creation of the Trust and Trust Fund goes together, which is why you may hear these words used interchangeably at times.
When Talking About Trusts and Trust Funds
1. Grantor: The individual who creates the trust and puts the assets into the trust fund
2. Beneficiary: Those who will receive the assets from the trust/trust fund. Can be an individual, several individuals or a group such as a charity.
3. Trustee: An individual (trusted family member, lawyer, or friend) or a corporation (trust department of a bank, a trust company) that manages the assets. A corporate trustee can manage the trust solely or be a co-trustee with that trusted individual.
The Trust Fund
• Created to house assets on behalf of the grantor under the supervision of a licensed estate planning attorney.
• are legal entities that hold a number of asset types for the named grantor, including money, real property, investment accounts, a business, or any combination of these options.
The reason people open trust funds is to ensure their assets are distributed in the manner they choose, while they’re still alive or after their death. Trust funds are set up by the grantor and managed by the trustee until the time comes for the beneficiary to receive the distribution (the payout).
When that time comes, the contents of the trust will be distributed in the manner as instructed by the terms of the trust. For example, money can be distributed as a lump sum or installments, while real estate property can be deeded over to the beneficiary.
A trust fund should only be prepared by a qualified estate attorney. Attorney Fesler will create a trust that reflects your wishes and is part of your comprehensive estate plan.
There are 4 basic steps in creating a trust fund:
1. Designate your trustee
2. Choose your beneficiaries
3. Create and notarize the trust document
4. Open a trust account and transfer the assets in
A revocable trust, often called a living trust, is one of the most common types of trusts used due to its flexibility and ease of setup.
It is sometimes called a living trust because it is meant to be utilized during the grantor’s lifetime, while they are alive. The assets will be available to the beneficiary at a pre-planned time, regardless of the status of the grantor, unless the grantor changes the terms during the life of the fund before the pre-planned time.
Revocable means that the trust can be revoked, meaning ended or dissolved, during the grantor’s lifetime.
There are a number of different types of trusts, all of which have slightly different payout methods and tax implications. In order to determine which type is best for you, you’ll need to work with Attorney Fesler to assess your situation’s specifics and then choose which option best fits your needs.
In California, Think about the Difference Between Trust and Wills
The primary difference between a will and wills is that assets in a living trust typically avoid the need for probate court. Because the assets are already in the trust fund, they can be transferred to your beneficiaries without waiting for a will to be carried out. In California, the probate process is particularly long, expensive, and public.
A benefit of a trust is the privacy factor. In California, trusts are a better way to distribute assets quickly and privately will a minimum of expense and stress on your beneficiaries/loved ones.
Trusts and trust funds can be a complicated concept to wrap your head around, so it is best to take on this task beginning with a conversation with Attorney Fesler. The bottom line is a trust fund allows you to ensure your assets will be shared with your loved ones in the way you choose, and that a trust should be created with the help of a licensed estate planning attorney.
Call our office at (760) 444-0943 or use our online form to send a message. Let’s get started. We look forward to exploring this topic further and setting up your trust and trust fund.