Trusts: Everything You Need to Know

When it comes to trusts I think the best place to start is at the beginning. Let’s talk about what a trust actually is.

The best way to describe a trust is like a separate box where you can put anything you want and create a variety of rules for how property in the box is handled by the person in charge of overseeing the property (trustee).

Depending on the rules you create for the box and the property you put in the box, the box (trust) has the ability to do a variety of different things for you.

Trust Basics: What Every Trust Can Do For You

The most basic of trusts has two benefits that:

Privacy; and
Avoiding probate.

If you do not have a trust and you only have a will or no will at all then the contents of your estate will become public record.

For most people this isn’t a problem.

A trust also allows you to remove whatever property you put into the trust from probate. In some states, like California, this is advantageous because probate is a complicated and expensive undertaking.

In Washington State, though, probate is not a difficult process.

Translation: any estate planning attorney in Washington State that tells you to create a trust to avoid probate is just trying to suck money out of you. You don’t need it.

Then Why Might I Want to Create a Trust?

Great question. Here are some reasons you might want to create a trust:

To keep your kids from getting a huge check when they turn 18;
To avoid estate taxes;
To protect your business;
To shield your assets from creditors;
To exercise control over your assets after you die;
To give money to charity;
To create an extra source of income for yourself;
To ensure a remarriage by your spouse doesn’t take money from the people you want it to go to; and
Much much more.

Trusts give you a tremendous amount of flexibility to plan for the present and plan for the future.

The key is having a good estate planning attorney on your team that can help you choose the best vehicles for your goals.

What Kind of Trusts are There?

Here is a short list of the trust vehicles available to you:

Revocable Living Trust;
Maximum Benefit Bypass (“B”) Trust;
Discretionary Trust;
Widow’s Election Trust;
Totten Trust;
Testamentary Trust;
Grantor Retained Annuity Trusts (GRATS);
Grantor Retained Interest Trusts (GRITS);
Irrevocable Life Insurance Trust (ILIT);
Charitable Remainder Annuity Trust;
Charitable Remainder Unitrust;
Charitable Lead Trust;
Crummy Trust;
Qualified Domestic Trust;
Qualified Personal Residence Trust;
Qualified Terminable Interest Property Trust; and
More and more are being created every day.

These trusts all have one ultimate goal – to give you maximum control over your money and the shape of your family long after you are no longer here.

Like most other estate planning activities, putting together a trust gets pretty complicated pretty quickly, and even a minor error can have major effects on the power of the trust.

Cheers,

Christopher Small
Estate Planning Attorney
CMS Law Firm LLC
150 Lake St., Suite 227
Kirkland, WA 98033
206.659.1512