What is a Trust? A Kirkland Estate Planning Lawyer Explains.
If you have been thinking about doing some estate planning you have probably come across the trust.
If you are here, then you probably aren’t sure exactly what it is.
That’s okay. I’m here to help you out.
The Easy Explanation as Told by a Kirkland Estate Planning Lawyer
I recently watched “The Big Short,” a movie about the financial industry and how some scheming financial brokers almost destroyed the world financial markets via housing bonds.
What was cool about the movie was they had little cuts where they would have someone relatively famous explain what sounded like a ridiculously complicated financial term (think Credit Default Swap and Mortgage Backed Security and Synthetic CDO).
I thought I’d do that for you right now.
After the simple version, then I’ll give you the complicated version.
Imagine you wanted to send a gift to your brother and there were two delivery services to potentially do the job.
The first delivery service guarantees deliver but is required to show anyone the gift that wants to take a look at it, no matter how private the gift may be.
In addition to that, once the delivery service drops the gift off they are done. Your brother can do whatever he wants to the gift and doesn’t have to take care of it, no matter how valuable the item is.
The second delivery service guarantees delivery but guarantees privacy. They won’t let anyone see the gift.
In addition to that, they have a duty to take care of the gift and, will, if instructed to do so, only deliver the gift at certain times and in certain situations, or however you instruct them to do so.
This is a trust.
See the difference?
The Complicated Definition of a Trust as Told by a Kirkland Estate Planning Lawyer
A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.
There are several different types of trust (which we’ll talk about later):
- Marital Trust
- Bypass Trust
- Testamentary Trust
- Irrevocable Life Insurance Trust (ILIT)
- Charitable Lead Trust
- Charitable Remainder Trust
- Generation Skipping Trust
- Qualified Terminable Interest Property Trust (QTIP)
- Grantor Retained Annuity Trust (GRAT)
For now, what you need to know is simply that trusts help you keep your business to yourself (wills are published public records that anyone can see) and provide a way for you to more specifically distribute your property.
To find out how to use a trust, if a trust is right for you, and what trust is right for you, you should probably talk to a Kirkland estate planning lawyer (like me).
Any questions? Ask in the comments below.
P.S. Do you have kids? Have you completed guardianship paperwork? Have you done it correctly? Click here to find out what happens if you don’t do anything: Are you okay with a judge choosing the guardians of your children?
P.P.S. Do you own a business? Do you have a plan so the business, and your family, can survive if something happens to you? If not, click here to learn how simple it is to protect your business and your family from tragedy: 5 Ways to Protect Your Business from Catastrophic Failure.
P.P.P.S. Do you have no kids and think you don’t need an estate plan? Single and think a will is only for married couples. You couldn’t be more wrong. Click here to learn more: 5 reasons estate planning is a must have even if you don’t have kids.
Christopher Small is a Kirkland estate planning attorney who helps people get rich and live forever. He is also the owner of CMS Law Firm LLC.