How Do I Create a Revocable or Irrevocable Trust?

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POSTED ON: June 6, 2022

Irrevocable Trust
Trust funds are an important estate planning tool. They can protect your assets while you’re alive and help ensure that you leave money to your children or other loved ones after you die.

A trust fund 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 and can be a revocable or irrevocable trust, explains Yahoo Finance’s recent article entitled “How to Start a Trust Fund the Easy Way.”

Trust funds are created by a grantor, who sets up the trust and transfers money or property into it. The trust can be a revocable or irrevocable trust and 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.

There are many benefits of setting up a trust to protect your family’s finances. You can use a trust to transfer assets outside of probate, and certain trusts arrangements may also help ensure that you don’t lose your money paying nursing home costs toward the end of your life.

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 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 including revocable and irrevocable trusts.

A trust is typically created when a grantor decides that having a separate legal arrangement for managing property is needed. He or she will work will an estate planning attorney to complete the legal paperwork needed to establish the trust and will designate a trustee to manage trust assets and the beneficiaries who will receive those assets. If the trust is a “revocable living trust,” one of the most common, then that trustee likely will be the grantor.

The grantor will transfer the legal ownership of money, property, or other assets to the trust.

The trustee 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, but in other types, they’re irrevocable and changes can’t easily be made once they are created. Expert legal advice and counsel is needed to get this right.

Call a Thousand Oaks Estate Planning Lawyer experienced with Revocable and Irrevocable Trusts. Book a Call

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

 

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