Trusts 101

A trust is simply a container that holds your assets so they can be managed the way you want during your life and after. It is a legal arrangement that lets one person hold and manage assets for the benefit of another. It doesn't need to be complicated or fancy. It’s not only for the wealthy. It’s just a tool that helps your wishes happen smoothly.

The grantor is the person who creates the trust. You decide what goes into it, who benefits, and how it should be managed. Think of yourself as the author of the instructions.

The trustee is the person or institution you choose to carry out your instructions. They manage the assets in the trust and make sure everything happens according to your wishes. A trustee can be a trusted friend, family member, or professional.

The beneficiary is the person (or people, or pets!) who benefit from the trust. They receive what you’ve set aside, for example, money, property, or care instructions.

Once a trust has been created, you need to fund it, which means that you need to move your assets into it. An unfunded trust is like an empty container. For things like your home or real estate, you change the title, so the trust becomes the owner. This is usually done with a new deed prepared and recorded properly. You add personal property, such as furniture, jewelry, collections, with a simple assignment document. For bank or investment accounts, you can open new accounts in the name of the trust or retitle existing accounts into the trust.

If set up correctly, you will be able to avoid the delays and stress of probate and keep things private. It is a way to make life easier for the people who love you. However, a trust is not always necessary depending on your assets and what you are trying to achieve. When deciding with your attorney whether a trust, a will, or both is best for you, you need to consider that a trust requires more paperwork and setup than a will, it is more complex than a will and will cost more to prepare than a will.

There are many different kinds of trusts, but two of the most common are revocable and irrevocable.

A revocable trust is the most common type of trust and the easiest to live with. You stay in charge. You can change it. You can update it. You can add or remove assets. You might consider a revocable trust if you want:

• Privacy

• Avoid probate

• Keep control during your lifetime

• Clear instructions for your home, pets, and personal items

• A smoother process for the people who will handle things later

When thinking about a revocable trust, you need to consider that there is no asset protection, no tax advantages, and everything is considered yours for legal and financial purposes. For this reason, it might just be easier setting up a will, a transfer on death deed for your real estate, and making sure your beneficiary designations are current.

An irrevocable trust is different. It’s more protective, more specialized, and less flexible. Most people don’t need one but for the right situation, it can be powerful. An irrevocable trust should be considered if you are looking for:

• Asset protection

• Medicaid or long‑term care planning

• Tax planning

• Life insurance planning

• Protecting a vulnerable loved one

Important things to note about an irrevocable trust are that you usually cannot change it, you give up control, it requires careful planning and clear goals, and it's not necessary for most everyday situations.

A trust is just another tool that can be used as part of your Life Essentials plan. As always, this is general guidance and not legal advice. You should always consult with an attorney in your state to be sure that your documents are created pursuant to the laws of your state. If you are in the Indianapolis metropolitan area and would like to talk about Life Essentials planning, click the button below.

Denise Bonk, Attorney at Law

317-202-5773 (talk or text available)

denise.bonk@outlook.com

PO Box 40233 Indianapolis IN 46240

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