Below is a general description of what a trust document is, and different types of trust documents that can be drafted by an estate planning attorney.
A trust agreement is a legal document outlining the procedure you want followed regarding the distribution of property placed in the trust. There are multiple types of trust documents that can be used for different reasons as estate planning tools to effectively transfer your assets as you choose. Common trusts are: revocable trusts, irrevocable trusts, testamentary trusts, minors trusts and asset protection trusts. A Denver estate planning attorneys at The McGuire Law Firm can assist you regarding these documents as explained in more detail below.
Revocable Living Trust
A revocable living trust is similar to a will in that it contains your wishes and instructions for the disposition of your assets at death. However, the revocable living trust can be used to avoid probate and prevent the court from controlling your assets if you are incapacitated, which a will cannot.
When the revocable living trust is established your assets are transferred from your name to the trust, which you control as the trustee of the trust. Therefore, you legally own nothing and there is nothing for the courts to administer at your death or incapacitation. As trustee of the trust, you are free make any and all decisions regarding the assets in the trust. You may buy or sell certain types of assets as well as invest and gift property to others.
The other provisions within your revocable living trust transfer the assets to your heirs upon your death, and the trust agreement can provide details regarding your ability and rights to amend the trust, how to distribute the assets from the trust, how family should be provided for, trustee duties and how a trustee shall be selected.
An irrevocable trust under the right circumstances can be an effective and appropriate way to protect and the manage the distribution of some or all of the money, property and assets in your estate. Once created, you (the grantor) are unable to change the terms or outcome of the trust except in limited circumstances.
You may want to consider an irrevocable trust for: asset protection and to prevent third party creditors and individuals from invading a portion of your estate; charitable giving and tax benefits; gifting to family and estate planning solutions for larger & taxable estates; providing for children with special needs who are on federal, state or local government benefits; and, there are many other reasons to consider an irrevocable trust.
A testamentary trust is similar to a will, but the document includes a trust. A testamentary trust can be used in estate planning with minor or younger children, or if a beneficiary is incapacitated. When you, the maker of the will pass, the will goes through probate, but instead of the assets going directly to your beneficiaries, they are placed into trust for the benefit of your beneficiaries. A trustee will control and manage the trust, and monies or assets from the trust can be distributed to your beneficiaries in certain amounts and at certain ages
Will With Minor’s Trust
Generally, there are two types of minor’s trust. A simple minors trust adheres to the Uniform Gift to Minors Act and thus property is held by a trustee/custodian until the child reaches the age of 21 and all funds are then distributed to the minor. With a complex minor’s trust, the will distributes assets to a testamentary trust and the terms of the trust can dictate the age and amount of distributions to the beneficiaries. For example, you may choose to have your child receive 33% of the assets at age 30, 50% at age 35 and the remaining assets at age 40. Thus, you have control over the amounts your beneficiaries receive and when the distribution of the trust assets occur.