What is Trusts?
A trust is a legal entity created by an individual, known as the “trustor,” to manage assets for the benefit of another person or entity. The trustee is responsible for managing and preserving the assets in the trust.
Trusts are used for estate planning purposes and can be set up for a variety of reasons, such as:
- To ensure that a beneficiary receives his or her inheritance on the date specified in the trust, regardless of what happens to the person who created the trust. For example, if you create a trust and name your children as beneficiaries, you may want to specify that if both parents die before the child reaches adulthood, their inheritance will be held by trustees until he or she turns 18 or 21. Surprise attorneys at Dodds Law Firm, PLC can guide you and provide you comprehensive guidance about Name a Custodian Under the Uniform Transfers to Minors Act so that you’d be able to create trusts with ease.
- to help avoid probate, which is when your assets are distributed through court proceedings after you pass away. This is particularly important if you own property in more than one state or if there are multiple heirs involved in your estate. A trust can also help avoid probate costs because it allows assets to pass directly from one person to another without going through the legal system first.
Here is an introduction of the three basic kinds of trusts, which should serve as a starting point for your research into the many possibilities that are open to you.
A revocable trust is one that you create for your own use during your lifetime. You can make changes to this trust at any time, and you can revoke it at any time. A trust that can be changed is called a “Living Trust.” With a revocable or Living Trust, you can name a successor trustee to take care of your affairs if you become unable to do so yourself. You can also avoid the extra cost of probate proceedings and keep your affairs more private.
An irrevocable trust is a trust that can’t be changed or canceled after the document has been signed. This makes it different from a revocable trust, which can be changed or ended and only becomes irrevocable when the person who made the trust, called the “grantor,” dies.
Some irrevocable trusts have terms that enable changes to be made at the discretion of the beneficiary based on Arizona Revised Statute 14-10411. However, these clauses are only valid if the appropriate clauses are included in the trust instruments. In most cases, making changes to an irrevocable trust is exceedingly difficult, if not outright impossible.
A testamentary trust is a special kind of irrevocable trust that only comes into existence after your death (hence the name). It usually takes effect after probate proceedings have ended and any necessary taxes have been paid off on those assets in question, or when those assets were given away as gifts prior to death and then passed down through inheritance according to 2013 Arizona Revised Statutes Title 14 – Trusts, Estates and Protective Proceedings 14-2511.
Call our trusts attorneys in Surprise, AZ Now!
Creating a trusts is something you must consider. Do you want to save money on the probate process? Consult a trusts attorney for legal advice. Call The Dodds Law Firm, PLC to schedule a consultation with our expert legal team. If you need assistance drafting a will or trusts, or both, trusts attorneys in Surprise, AZ can help!