Louisville Trusts Law Firm
If you are an adult of at least 18 years of age, you own property, are married, or/and you have any children, you’ve probably already spent some time thinking about putting together an estate plan to ensure that your property is divided per your wishes, and that your children and other beneficiaries are provided for when you’re no longer around. Indeed, you may have even already created a will and other estate planning documents, such as a living will or power of attorney.
But if you haven’t taken the time to at least learn about trusts, your estate plan isn’t yet complete. At the law office of John H. Ruby & Associates, we are very experienced in the creation of trusts, and are here to provide you with the knowledge, information, and legal guidance you’re looking for.
What Is a Trust?
A trust is a type of legal arrangement that involves three parties: the settlor (the person who creates the trust), the trustee (the person responsible for controlling the trust), and the beneficiary (the person to whom assets held in the trust will eventually be distributed). In a trust arrangement, the settlor puts assets into a trust and names a trustee, and the trustee is responsible for management of the trust and distribution of assets in the trust to any beneficiary. For example, parents may create a trust that a child can begin collecting from at age 18, and may instruct the trustee to give a specific amount of money per month from the trust to the child starting at that age.
Different Types of Trusts
There are many types of trusts that are used for a variety of purposes. For example, some trusts have more tax benefits than do others, some trusts are designed to provide for loved ones with special needs, other trusts are designed to protect assets, and more. A list of some of the most common types of trusts (but by no means all the trust types) follows – if you have questions about what type of trust is right for you, don’t hesitate to call our legal team.
- Living trusts;
- Testamentary trusts;
- Revocable trusts – A trust, generally, holds your property for the benefit of another, the beneficiary. When you place your assets in an irrevocable trust, however, those assets are no longer legally yours. You also cannot change or terminate the trust; only the beneficiary can. Irrevocable trusts may also be an important component of your estate planning.
- Irrevocable trusts – A trust, generally, holds your property for the benefit of another, the beneficiary. When you place your assets in an irrevocable trust, however, those assets are no longer legally yours. You also cannot change or terminate the trust; only the beneficiary can. Irrevocable trusts may also be an important component of your estate planning.
- Charitable trusts; and
- Special needs trusts.
How to Create a Trust
The requirements for creating a trust are very similar to the requirements for creating other estate planning documents in Kentucky: the creator must be at least 18 years of age and of sound mind, and must be making the trust of their own will. The person creating the trust must name a trustee to hold assets in the trust, as well as beneficiaries of the trust. The creation of the trust must also include directions for which assets are to be distributed to which beneficiaries, and how.
What Are the Advantages to Creating a Trust?
You may be thinking that because you already have a will or other estate planning document, you don’t really need to create a trust. However, trusts offer some unique benefits that other estate planning documents do not. For example:
- Assets held in a trust are not subject to the probate process. One of the biggest advantages of using a trust in addition to other estate planning documents is that assets held in a trust are not subject to the probate process. When assets go through probate, they are delayed in being passed to beneficiaries. The probate process is also complex, and potentially strenuous and expensive.
- Trusts are more private. Another advantage to a trust (when compared to a will) is that a trust is private, whereas a will becomes public record. For individuals and families who want to preserve some semblance of privacy, trusts offer freedom from invasion into one’s personal affairs.
- Trusts allows for assets to be distributed per your wishes. Consider a situation in which you have a relative who you love dearly and want to leave money to, but you’re worried that if you leave a large chunk of change at once, they’ll squander it as a result of their poor money management skills. When you put money in a trust, on the other hand, you can choose when the money is given and how often, how much is given at once, and can even include provisions for explicit use (i.e. the money is intended to pay for relative A’s monthly rent).
- Trusts can be used to mitigate taxes. For high asset individuals who are worried about the tax consequences of certain financial decisions, the creation of a trust can be a smart maneuver that is used to mitigate taxes and protect an estate.
Why Do I Need a Lawyer When Creating a Trust?
It is strongly recommended that you work with an estate planning attorney when creating documents for the management of your assets. This is especially true when creating a trust, as trusts are much more legally complex than are wills, and with more room for errors when attempting to creating a trust on your own. An attorney can review your entire financial picture to help you to understand what types of estate planning documents should be included in your plan, what type of trust is most beneficial for your circumstance, and how to create your trust. Your attorney can also work with you over the years to help you make changes to your trust (and other estate planning documents) as you see fit.
Litigation of Trusts
Trust litigation allows interested parties to the trust to initiate legal proceedings regarding:
- Administration and distribution of the trust
- Appointment or removal of a trustee
- Fee reviews
- Determination of beneficiaries
Trusts, and trust litigation, can be complicated, and legal representation is essential in these matters.
Call the Trust Attorneys at the Office of John H. Ruby & Associates Today
Creating a trust may be a smart decision for you. To learn more about whether or not your estate plan would benefit from the creation of a trust, call our law offices today. Trust Attorney John H. Ruby has nearly 20 years of experience creating trusts for clients throughout Kentucky, and can answer all your questions honestly and accurately.
To schedule a consultation with our law office, please call us at 502-895-2626, visit our Louisville office in person, or fill out the form on our website telling us a little bit more about the services you’re looking for and how you’d like to be contacted, and we’ll be in touch shortly!