A trust can own almost any kind of asset except for retirement plans. The types of assets that can be retitled in the name of the trust include cash accounts such as checking accounts, savings accounts, money market accounts and CDs; brokerage accounts; non-qualified annuities (and the trust can also be named as the primary or secondary beneficiary); monies owed to you; oil, gas and mineral rights; and royalties, copyrights, trademarks, and patents.
Tangible personal property such as jewelry, clothing, books, household goods, furniture, antiques, collectibles, artwork and pets can also be owned by a trust.
Business interests including shares of stock in a closely held corporation, partnership interests, and membership interests in limited liability companies can also be transferred to a trust, but you should consult any shareholder agreements, partnership agreements, and operating agreements for restrictions on transfers and specific procedures to retitle the shares in the name of the trust.
Finally, real estate can be retitled (or purchased) in the name of the trust, but the transfer requires recording a new deed in the locality where the real property is located.
The Amount of Assets Required To Establish A Trust
There is no minimum amount of money or type of asset required to establish a trust. Although a trust can be funded with a small amount of money, whether or not to create one is a financial decision based on the overall benefits and the estate plan, and not on the amount of the trust itself.
Trusts are discussed in more detail in my book “Nothing But The Truth About Estate Planning, Probate And Living Trusts”. Download your copy here: Nothing But The Truth About Estate Planning, Probate And Living Trusts by Larry Israeloff CPA & tax attorney.
The person who creates a trust is called the creator, the settlor, or the grantor. The trustee is the person or persons who hold title to the trust property in their name. The trustee has a fiduciary duty to protect and manage the trust property for the benefit of the trust beneficiary. The beneficiary is the person or persons for whose benefit the trust is managed and administered. The creator of a trust can also be the trustee, the beneficiary, or both. A trustee who is not the creator can also be the beneficiary. So although the same person can occupy more than one role in a trust, each of the three roles remain separate and distinct.
The Costs Associated With Setting Up A Trust
A trust is created by signing a trust agreement with the trustee and then transferring property into the name of the trust (which is referred to as funding the trust). A trust does not exist until property is actually transferred into it, even if a trust agreement is signed. It does not take a long time to form a trust – only as long as it takes to draft and sign a trust agreement and then complete the necessary steps (usually the completion of paperwork) to transfer the property into the name of the trust. A trust can cost anywhere from a few hundred dollars to thousands of dollars in legal fees, depending on the complexity of the trust agreement’s terms and the type and amount of property to be transferred into the trust. “The Parties Involved In A Trust” is discussed in more detail in my book “Nothing But The Truth About Estate Planning, Probate And Living Trusts”. Download your copy here: Nothing But The Truth About Estate Planning, Probate And Living Trusts by Larry Israeloff CPA & tax attorney.
To the layperson, trusts can appear complicated. People often think trusts are only for the very wealthy. In reality, trusts can be useful for people of all income levels.
A trust is a legal arrangement under state law governed by a written trust agreement by which property or assets are owned in the name of one or more trustees with a fiduciary responsibility to protect and manage the property for the benefit of another person or persons. A trust divides the ownership of property into two parts: the legal title, which is in the name of trustee, and the beneficial ownership interest, which is managed by the trustee for the benefit of the beneficiaries.
A trust is created by the signing of the trust agreement by the creator (also called the grantor or the settler of the trust) and the trustee. The trust agreement specifies the duties and obligations of the trustee and how the income and principal of the trust will be distributed to the named beneficiaries. Trusts provide considerable flexibility in transferring property from one generation to another.
A trust created during the creator’s lifetime is called an “inter vivos” trust or living trust. A living trust can be either a revocable trust or an irrevocable trust. A revocable trust is a trust that can be changed or revoked by the creator. An irrevocable trust cannot be changed or revoked by the creator (although an irrevocable trust can sometimes be changed or terminated by the trustee under certain circumstances).
A trust created in a will when the creator dies is called a testamentary trust. It is a part of the creator’s estate plan. Testamentary trust is always an irrevocable trust, because the creator is not alive to change or revoke the trust.
Common Types of Trusts
Living trusts (revocable and irrevocable) and testamentary trusts can be created for many different purposes and are referred to using many different names depending on their main purpose, such as asset protection trust, charitable trust, special needs trust, credit shelter trust, bypass trust, dynasty trust, grantor trust, Crummey trust, life insurance trust, personal residence trust, and many others. Despite the variety of labels applied to them, all trusts are basically arrangements to hold and control property for the benefit of other people.
Trust As Part Of An Estate Plan is discussed in more detail in my book “Nothing But The Truth About Estate Planning, Probate And Living Trusts”. Download your copy here: Nothing But The Truth About Estate Planning, Probate And Living Trusts by Larry Israeloff CPA & tax attorney.
From a simple standpoint, many people initially think of an estate plan as having a will. On the more complicated end, some think of an estate plan as an elaborate arrangement only rich people need to plan
who gets what out of their millions of dollars. Most people think estate plans only apply to the ultra-wealthy.
But no matter how large or how modest, everyone has an estate. Your estate is comprised of everything you own— your car, home, bank accounts, investments, life insurance, furniture, personal possessions. And just like the wealthy, you probably want to control, with the least expense, how those things are given to the people or organizations you care most about. That is estate planning—making a written plan in advance with instructions stating whom you want to receive the things you own after you die.
Estate planning is not just for “the wealthy.” Good estate planning often means more to families with modest assets, because they can afford to lose the least.
The above is an excerpt from my book “Nothing But The Truth About Estate Planning, Probate, And Living Trusts.