Estate Planning is the process whereby you review your personal and financial information, and develop a plan to ensure that your family is cared for, your assets are properly distributed, and their value maximized for the benefit of your designated beneficiaries in the event of your death. Inter Vivos (“Living”) and Testamentary Trusts can be an important vehicle for accomplishing these objectives in coordination with a properly drafted Last Will and Testament.
A trust can provide flexibility in the management and use of your assets over time. A Trust is a fiduciary arrangement whereby a Grantor (or Trustor) gives property to a Trustee for the benefit of beneficiaries. The Trustee holds legal title to the property and is bound to follow the directions of the Grantor as to the distribution of property to beneficiaries.
An Inter Vivos or Living Trust is one that is set up during the life time of the Grantor or Grantors, who may also be Trustee(s) and Beneficiaries. Property, such as real property, brokerage accounts, and vehicles, can be titled to the Trust (rather than an individual’s name) during the lifetime of the individual Grantors. The Trust generally provides for the property to be used for their benefit during their lifetime, with provisions for disposition upon their death. The Trust continues past their death, so the property that is titled to the Trust does not change ownership, though the beneficiaries may change. The property does not need to go through probate.
A Testamentary Trust is included in a will, and is not created until the death of the Testator, upon the conditions named in the will. This is most commonly used in the event the Testator wants to provide for minor Children upon his or her death. A Trustee can be named who is directed to manage money for the children’s benefit, generally ensure their wellbeing and education, and make distribution of principal to Children at designated times such as the eighteenth, twenty-fifth, and thirtieth birthdays.