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Attorney General Marty Jackley

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Trusts

A trust can be a valuable estate planning tool. A trust is a document that you can use to transfer ownership of your property to a trustee. The trustee will then manage the property for the benefit of others and you.

As a person forming the trust, you are called the settlor, grantor, or trustor. All three terms mean basically the same thing. Those who are meant to benefit from the trust are the beneficiaries.

The trustee is someone picked by you to manage and care for the property you put in trust. The trustee may be a friend, family member, bank, or anyone you choose. In some cases, you can name yourself as trustee.

The trustee should be someone you trust and someone capable of managing the property as you have directed in the trust agreement. You should consider naming a successor trustee to act in the event the first trustee becomes unable or unwilling to serve.

There are several different types of trusts that may be used for different reasons. Some trusts are created to take effect when you die. These are called testamentary trusts. Some trusts are designed to take effect while you are alive. These are called living trusts. Some trusts are created to turn over the management of property to a professional, while still others are simply to avoid taxes and probate costs. Some trusts can be canceled by you after you set them up. Those are revocable trusts. A trust you cannot cancel after you create them are irrevocable trusts.

There are several legitimate reasons for creating a revocable living trust. It can be an excellent way to let someone else manage the property when you are no longer willing or able to do so. In some case, it might be cheaper to create the trust than it is to do a probate.

Some people have been led to believe that with a revocable living trust you avoid paying taxes, claims by your creditors, or be used as a way to qualify for Medicaid. This is simply not true. This type of trust may help you lesson probate costs, but it will only avoid those costs if all of your property is placed into the trust.

Creating a living trust usually takes more time and money than having a will prepared. You may also have to pay a trustee to manage the property.

There are "do it yourself" living trust forms and kits available. You should keep in mind though, these forms might not fit your situation. Using these forms could lead to legal and tax problems. It might end up costing you more than it would to get advice from a good lawyer, accountant, banker, or insurance agent.

There are ways to put your property in trust so that you can minimize the income tax burden, minimize estate taxes , and avoid probate costs as well. Usually, getting all of these benefits does come with a cost. You usually give up total control of your property.

There will be increased expenses in creating such trusts, and there might also be gift taxes to pay. You will probably not have the ability to cancel the trust and you probably won't be its only trustee.

There is no one right approach for everyone. Too much depends on individual circumstances and wishes. Some trusts have an advantage over a will, and some do not.

In most cases, however, you will be able to accomplish what you want by putting together a will.