A trust is a legal document that allows a third party to manage assets for the benefit of another party.
In a typical trust, the following are the relevant parties:
Grantor | Settlor – The person setting up the trust
Trustee | Successor Trustee – A trustee is responsible for managing the trust assets for the beneficiaries.
Beneficiary | Beneficiaries – The party to receive the assets or benefits from the trust.
A Trustee is considered a fiduciary and must abide by the grantor's wishes outlined in the trust document.
Revocable Living Trust
A revocable trust stipulates how you want your assets distributed at your death. A trust is different than a will because it is a private contract that avoids probate and can continue for many generations. A revocable trust is created during your lifetime and can be changed or amended at any time. It does not provide any asset protection while you are living. Since you can put assets in and take assets out of the trust, then so can a potential creditor. A revocable trust becomes irrevocable at your death and then may provide asset protection for your beneficiaries.
Five Benefits of a Revocable Trust:
Avoid probate – Probate is the court-supervised distribution of your assets to your heirs. Probate is the process of transferring any assets titled in your name at death to your beneficiaries. When you transfer the legal title of your assets during your life from your name individually to the trust, you have successfully avoided the probate process. Probate can be time-intensive, expensive, and public. Probate typically costs between 3% and 7% of the value of your estate.
Privacy – Many people do not want others to know about their financial affairs. If you pass away with a will, anyone can view your assets as they are public record filed with the local court. A trust is a confidential document and not filed with the court. Once you pass away, your successor trustee will step into your shoes and distribute your assets per your wishes.
Continuance, Control from the Grave, Asset Protection – A trust can continue after your death for your beneficiaries for as long as state law allows. You may not want to give your beneficiaries an outright distribution, but instead give them assets over time, or even keep assets in trust to benefit them for their lifetime. A trust can continue for multiple generations, and you can be assured you leave your beneficiaries a lasting legacy. As long as assets stay in the trust, they should not be subject to potential creditors of your beneficiaries, including divorcing spouses.
Incapacity Planning – A trust will appoint a successor trustee to manage your financial affairs should you become incapacitated or pass away. As people are living longer, incapacity planning is critically important for you and your heirs. Having a trust will allow the successor trustee to step into your shoes and take care of you and your finances should you become incapacitated.
Minimize Estate Taxes – The current estate tax exemption is $11.58M for an individual or $26.13M per married couple. This is the amount of money you can distribute to your heirs at your death without paying an estate tax. Any dollar over that threshold with incurs a 40% estate tax. Currently, less than 1% of the public has an estate tax issue, however, the estate tax is always changing with the political environment. A revocable trust can preserve the estate tax exemption between spouses, thereby minimizing estate taxes payable when a surviving spouse dies.
What are the Differences Between a Will and a Trust?
Pros of a Will
Cons of a Will
Inexpensive
Court supervision and distribution of assets, aka Probate
No retitling of assets required
No asset protection
Appoints a guardian for minor children
Zero privacy
Pros of a Trust
Cons of a Trust
No court entanglement. Your successor trustee steps in immediately and distributes assets per your wishes
More expensive than a will
Privacy is maintained
More time and effort required to retitle assets into the name of your trust
Trusts can continue for more than one generation protecting your beneficiaries from creditors and estate depletion
Name ICON as Your Successor Trustee?
Choosing your successor trustee is often the most difficult decision when drafting your trust. Very often clients choose their oldest child without realizing the burden they have just put on that child. Family heartaches can be easily avoided by naming a trustee that is a third party, unbiased, and professionally trained in trust administration. If you would like to see the advantages of a corporate trustee over an individual click here.
IconTrust can serve as the successor trustee of your revocable trust and distribute your assets per your wishes. We have experience dealing with beneficiaries and pride ourselves on providing superior customer service. Naming IconTrust is as simple as communicating with your attorney your wishes to name IconTrust in your trust document. If you already have a trust, a simple amendment will be needed. We ask that if you name IconTrust as successor trustee, please send us a copy of the document to be
store securely in our future business file. We are happy to meet with you before or after signing your trust document to discuss our services in greater detail. If you have any questions, please email info@icontrustnv.com or call 702-998-3700
