How can my mother set up a revocable trust to bypass probate with out great financial costs?
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Answer:
A trust can be created during a person's lifetime and survive the person's death. A trust can also be created by a will and formed after death. Once assets are put into the trust they belong to the trust itself, not the trustee, and remain subject to the rules and instructions of the trust document. Most basically, a trust is a right in property, which is held in a fiduciary relationship by one party for the benefit of another. The trustee is the one who holds title to the trust property, and the beneficiary is the person who receives the benefits of the trust. While there are a number of different types of trusts, the basic types are revocable and irrevocable.
A revocable living trust may be amended or revoked at any time by the person or persons who created it as long as he, she, or they are still competent. A living trust agreement gives the trustee the legal right to manage and control the assets held in the trust. It also nstructs the trustee to manage the trust's assets for your benefit during your lifetime and names the beneficiaries (persons or charitable organizations) who are to receive your trust's assets when you die.
The trust document gives guidance and certain powers and authority to the trustee to manage and distribute your trust's assets. The trustee is a fiduciary, which means he or she holds a position of trust and confidence and is subject to strict responsibilities and very high standards. For example, the trustee cannot use your trust's assets for his or her own personal use or benefit without your explicit permission. Instead, the trustee must hold and use trust assets solely for the benefit of the trust's beneficiaries
Irrevocable trusts are trusts that cannot be amended or revoked once they have been created. These are generally tax-sensitive documents. Some examples include irrevocable life insurance trusts, irrevocable trusts for children, and charitable trusts. With an irrevocable trust, all of the property in the trust, plus all future appreciation on the property, is out of your taxable estate. They may also be used to plan for Medicare eligibility if a parent enters a nursing hiome.
A trust created in an individual's will is called a testamentary trust. Because a will can become effective only upon death, a testamentary trust is generally created at or following the date of the settlor's death. They do not address the management of your assets during your lifetime. They can, however, provide for young children and others who would need someone to manage their assets after your death.
It is possible to create a trust without the assistance of an attorney. The most basic steps to creating a trust include:
1. Execute a Declaration of Trust. This will describe the nature and purpose of the trust, name the trustee(s), beneficiary(ies), other parties involved, the requirements for decision-making by the trustees (including any delegation of decisions), the trustees’ powers to invest and distribute trust assets, and other powers of the trust.
2. Transfer / place property and assets into the trust. The trust becomes the legal owner of the property. However, you can keep control over the trust by appointing yourself the trustee.
You should choose yourself and/or another trustworthy person to be trustees of your trust. . You should also choose successor trustees in case you or your co-trustee can not perform the duties of the trust. The property placed in a trust must exist and be owned by the principal. The property can be real estate, personal, intellectual, or transferable interest.
