Maine Will and Trust Attorney

Interested in setting up a Trust? Learn the different Types:

Trusts:

Trusts are somewhat more complicated than wills, and the many different types can greatly benefit your estate and beneficiaries. Generally, a trust provides for the distribution and management of your assets during your lifetime and after death. They can apply to any asset you hold inside the trust and offer more control over when and how your assets are distributed. There are many different forms and types, far more than wills.

However, the creation of a trust is only the beginning of the process. You must fund your trust by legally transferring assets into it, making the trust the owner of those assets. This process makes creating it a bit more complicated to set up; however, a trust is often enacted to minimize or completely avoid probate, thus keeping personal records private.

Avoiding probate is a huge advantage for some people and often justifies the additional complex legal work of setting up a trust. There are nearly as many types of trusts as issues to address in your estate planning, and each offers different protections. However, trusts generally fall into three basic categories.

Basic types:

A revocable living trust is, by far, the most commonly implemented type. The person who creates and funds it is known as the grantor and will typically act as the directing trustee during their lifetime. The grantor may undo the trust, change its terms, and move property and assets in and out of the trust's ownership as they deem desirable. Revocable living trusts are designed to switch to an irrevocable upon the death of the grantor.

An irrevocable living trust is legally binding on its date of designation and allows very few provisions for change. The grantor funds the irrevocable living trust with property and assets, and the property is then under the care and control of the individual the grantor names as trustee. The grantor cannot change their mind and "undo" the trust. There are unique tax implications and other benefits to an irrevocable trust, including protecting a person’s home and savings from the high costs of long term care. These benefits can make relinquishing control worthwhile.

Testamentary trust is a provision within a will, appointing a trustee to manage the deceased's assets. This trust is often used when the beneficiaries are minor children or someone who is receiving public benefits. This type is also used to reduce estate tax liabilities and ensure professional asset management. A testamentary trust is not a living trust. It only exists upon the death of the testator (the writer of the will). The executor of the deceased's estate would follow the terms of the trust (called administering) as part of the probate process.

Things to put into a trust include:

• Stocks, bonds, mutual funds
• Money market accounts
• Brokerage accounts
• Patents, copyrights, and royalty contracts
• House and other real estates
• Business interests and notes payable to you
• Jewelry and precious metals
• Works of art or other valuable collections

Assets not affected include:

• Life insurance proceeds
• Payable on death bank accounts
• Retirement accounts
• Jointly owned assets
• Real estate subject to transfer-on-death deed