How Do I Create a Trust? Is it Right for Me?

A revocable living trust is a legal entity you create that takes ownership of your assets and ensures that the assets are used in a way that's beneficial to your loved ones, explains Yahoo Finance’s recent article entitled “How to Start a Trust Fund the Easy Way.”

Revocable living trusts are created by a grantor, who sets up the trust and transfers money or property into it. The trust is created for a beneficiary who will benefit from the property held within the trust. However, the trust is the legal owner of that property. The grantor will name a trustee who will have a legal obligation to effectively manage the trust property following the grantor's instructions. Usually, with a revocable living trust, you are both the grantor and the trustee, so you can control and change the trust as you wish in your lifetime. It is also common for a married couple to serve as joint trustees.

There are many benefits of setting up a trust to protect your family. You can use a trust to transfer assets outside of probate, and decide how and when property passes to your family, which allows you to pass along not only your property but your values.

You can also use a trust to make sure money is appropriately managed for your children or grandchildren. This can be especially helpful when leaving money to minors and younger adults, as well as for older beneficiaries who don't know how to invest money effectively.

The specific advantages of a trust depend on the type of trust you create. There are many varieties.

A trust is typically created when a grantor decides that having a separate legal arrangement for managing property is beneficial. The grantor will transfer the legal ownership of money, property, or other assets to the trust or direct assets to the trust at the grantors death. That is how a trust is "funded."

The trustee, often times the grantor in his or her lifetime, is responsible for managing the trust assets responsibly and making distributions of assets to beneficiaries, when appropriate and according to the instructions of the grantor. This might be something like when a grantor created a trust to pay for college costs for his children, the trustee will distribute the money to cover tuition bills.

Trusts can sometimes be changed, as is the case with revocable living trusts, but other trusts are irrevocable and changes can't easily be made once they are created. Expert legal advice and counsel is needed to get this right. If you own a home, minor children, life insurance, investments (however modest), a revocable living trust may be right for you. Contact Rick Coad in Madison, Wisconsin to discuss your plan today.

Reference:  Yahoo Finance (March 18, 2022) “How to Start a Trust Fund the Easy Way”

Suggested Key Terms: Estate Planning Lawyer, Probate Court, Inheritance, Asset Protection, Trusts, Trustee, Irrevocable Trust

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