When it comes to guaranteeing your family’s future, drawing up a will is one of the most common choices that people make. But while a will has its advantages in ensuring that your prized possessions go to your loved ones after you pass, it also has its disadvantages. Another estate planning option is to set up a trust, in which your estate is administered by a trustee according to your wishes. This has the advantage of allowing you to avoid the lengthy probate process. Trust administration can be a bit complicated, but by working with a trusted estate planning attorney, you can ensure that everything will run smoothly.
What is a Trust?
A trust is an arrangement by which a third party, known as a trustee, holds the assets belonging to a person and administers them according to the terms of the trust. There are several types of trusts, with the most basic distinction being between revocable and irrevocable trusts. Revocable trusts can be changed after they’re created while irrevocable trusts cannot. In addition, there are various types of miscellaneous and special needs trusts.
When it comes to estate planning, a trust is most often used as tool for ensuring that your assets reach their intended beneficiaries after you die with the least amount of trouble. Once you set up your trust, your trustee will manage it according to your wishes. When you pass on, they will ensure that the trust is administered according to your wishes. Because a trust, unlike a will, is not subject to the probate process, your loved ones will typically receive their assets in a more timely manner. A trust may also provide some tax relief that is not possible with a will.
Trust Administration: How It Works
Trust administration is a multi-part process, so it’s a good idea to know how it works before getting started.
Here are the basic steps:
- Setting Up the Trust. When you first decide to set up a trust, you’ll need to make a thorough inventory of your assets. You’ll want to obtain all the necessary documentation in order to provide it to the trustee. Once you’ve done this, you’ll need to decide who your beneficiaries will be and what assets they’ll receive. When these decisions have been made, you’ll fill out the necessary trust documents and officially file the paperwork. Finally, you’ll ensure that the trustee has all the information they need and you’ll notify all beneficiaries and interested parties about their role in the trust.
- Ongoing Administration. Once you’ve turned over the trust to the trustee, that individual will be in charge of managing the trust’s assets. They will decide how to invest these assets and will maintain good record-keeping and accounting. They will also file tax returns and pay taxes. If you’ve set up a revocable trust, you can change the terms of the agreement at any time during this stage.
- Distribution of the Trust. Once you’ve passed on and the estate is ready to be administered, the trustee will begin distributing assets according to your intentions as laid out in the trust documents. The trustee will pay any outstanding debts and taxes and will file the paperwork to officially close the trust.
Contact the Estate Planning Experts at Deliberato Law Center
If you have any questions about trust administration or any aspect of estate planning, do not hesitate to contact the experienced attorneys at Deliberato Law Center. Give us a call today at 216-341-3413 or fill out the form below to get started.