No matter where you are in the estate planning process or if you are just starting to consider your options, you probably have questions about how you want your assets distributed and who should be given that responsibility. A trust can be a great tool in your estate planning tool kit. A properly created trust can give you and your family more options and privacy than a will. Trustees fulfill vital roles in this situation. This blog explains.
Unlike a will, a trust will help keep your estate from going through an expensive, time-consuming, and public probate process. If you set up a trust, with trustees, you still create a will, but it becomes a pour-over will, which moves (pours) your assets into your trust. You can choose from different types of trusts, depending on how and when you want your assets dispersed.
Types of Trusts: And Roles Trustees Fill
There are many types of trusts, but they all establish a financial arrangement between three parties: the trustor(s), the trustee(s), and the beneficiary(ies). The person creating the trust is known as the trustor, grantor, or trustmaker. Trusts can be created by more than one person. The trustor chooses one or more persons or entities to serve as trustees. The trust is for the benefit of one or more beneficiaries, which can be people or entities, such as charities. For some trusts, the trustor, trustee, and beneficiary are the same person.
Common Types of Trusts & Trustees
- Living Trust
Keeps the assets available to the trustor while they are alive and dictates how they will be dispersed after the trustor’s death. - Testamentary Trust
Created after a person has died and is for the benefit of the deceased person’s heirs. - Revocable Trust
Similar to a living trust, the trustor can be a beneficiary during their life and can designate who the beneficiaries will be after they die. - Irrevocable Trust
Once created, it cannot be changed, so it is useful for protecting assets from creditors, taxes, and qualifying for Medicaid. - Qualified Income Trust (Miller Trust)
Holds the trustor’s income that exceeds the Medicaid qualification limits so they can continue to receive Medicaid benefits. Not available in all states.
Choosing Trustees
In most cases, the trustee of a trust can also be a beneficiary of the trust. One notable example of when a beneficiary cannot be the trustee of their trust is with a special needs trust. For the beneficiary of a special needs trust to qualify for government assistance, they cannot have any control over the assets of their trust or how they are managed and dispersed.
When considering who will be the trustee of your trust, choose a person you can rely on to follow the instructions you lay out in the trust. This person can be a reliable family member, friend, or an entity, such as a bank or trust company. For some trusts, such as a living trust, you can be the initial trustee and select someone else to be the trustee if you become incapacitated or when you die.
About Skvarna Law Firm in Glendora and Upland, California
Let a skilled attorney assist with your estate plan. So, contact us today to learn about your options (909) 608-7671. We operate offices in Glendora and Upland, California. Therefore, we provide legal services for individuals living in San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes the cities of Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Montclair, Pomona, La Verne, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
