There are numerous reasons why an individual may want to create a trust, and there are numerous types of trusts that can be created. One of the most common reasons to create a trust is the desire to provide for minor children or grandchildren, or to ensure that the assets are managed until a time that the child or grandchild is responsible and capable enough to manage the assets on their own.
Other common reasons to create a trust are to avoid probate. Some trusts are created to provide liquidity in the event that estate taxes are due. Other trusts are created to permanently give away assets to reduce a client’s exposure to estate tax or other tax liabilities. There is a myriad of reasons that an individual may wish to discuss the creation of a trust for their comprehensive estate plan. To form a trust, an individual should contact an experienced Bethesda trust and estates lawyer as soon as possible to help ensure that all necessary legal proceedings are taken care of.
Related Roles of an Attorney
References for the Creation of Trusts
Trust vs. Bank Account
A trust is a legal document. It is an agreement between a settlor or the person that is creating a trust and the trustee. A trust is essentially a management vehicle for assets in many cases. Bank accounts may be one of the assets that are titled in the name of the trust.
A bank account is different because it is an account with a financial institution to hold assets. For example, an individual could have a bank account in their sole name. That same individual could have a bank account that is titled in the name of the trust. The trust, the terms of the trust, and the provisions of the trust that describe who may serve as trustee govern how an account titled in the name of the trust can be managed versus a bank account, which is in an individual’s estate. A Bethesda trust and estates attorney can assist an individual in best understanding the elements surrounding their trust account.
Benefits of an Attorney
It can be very prudent to speak with a Bethesda trust and estates attorney for the creation of a trust. The terms and the concepts involved with drafting a trust are often very complex and complicated. Individuals may benefit from counsel who can advise them about how to properly create, fund, and administer the trust after it is established.
A very common mistake with the creation of trust is that the trust is created during someone’s lifetime but no assets are transferred into it. The result is that the trust document is moot and does not govern any of the assets of a decedent’s estate unless they are coordinated to be governed by the trust by the document.
Points to Consider
A Bethesda trust and estates lawyer’s approach to estate planning is a comprehensive approach that looks at an individual’s entire estate plan. With the assistance of an attorney, a person can review their needs for a trust and how to best incorporate a trust into a comprehensive estate plan.
It is not uncommon for an individual’s estate plans to include one or several different types of trusts to accomplish their needs. It may be helpful to remember that while the concept of trust can be complex, an estate and trust attorney can assist with explaining the concepts and identify what trust may be a good fit.