Just like a divorce or will, it is possible but highly inadvisable to create a trust on your own. For example, if you have limited assets or only a single beneficiary (e.g., a surviving spouse), it may very well be possible to create a simple trust on your own, but without an attorney, you may be missing crucial aspects of your situation that could cost your loved ones. Most people assume that if they don’t have excessive wealth or many beneficiaries, you don’t need an attorney. However, that’s a misconception that could affect all aspects of your trust.
Most people who determine they need a trust concurrently determine that they need a lawyer to help them create and implement it. Complex assets, large families, and shared business interests are some of the situations that might make it worth the time and resources to find a detail-oriented estate planning lawyer to help you set up a proper, legally binding trust. Only by working with a qualified trust attorney can you ensure that your trust meets all of your needs and will be legally enforceable upon your passing.
Q: Is a Trust the Same Thing as an Estate Plan?
A: No. While a trust might be a vital part of your estate plan or its foundation, setting up a trust alone does not constitute estate planning. Many people who have trusts also set up wills, durable powers of attorney, and other legal documents as part of an overall estate plan. Costa Mesa estate planning attorney Christopher P. Walker can analyze your particular situation, including your family, finances, health, and business interests, to determine the estate planning strategy that will cover all of your needs.
Q: How Does a Trust Actually Work?
A: The basic idea behind a trust is relatively simple. The trustor (the person putting assets into a trust) creates the trust as a legal and financial instrument to transfer ownership of assets. Some people think of a trust as a special bank account, but it’s more than that. You can think of a trust as a trusted third party that takes temporary ownership of assets. Once certain conditions are met (a beneficiary reaching the age of legal adulthood is a typical example), the assets in the trust are distributed to the beneficiaries according to your predetermined instructions.
Q: What Is a Trustee?
A: A designated trustee administers trusts. The trustee might be your spouse, a trusted business partner, your attorney, or even an institution. After your death, the trustee is responsible for ensuring the assets placed in trust get distributed to your beneficiaries per your instructions. The trustee typically receives some percentage of the assets in compensation for this duty (the payment details will be spelled out in the trust). The trustee can also be held legally liable for any mismanagement of the trust. As implied by the name of the process, mutual trust is vital in the relationship between trustee and trustor.
Q: What Sort of Assets Can Be Placed in Trust?
A: A trust is a versatile legal tool because many diverse assets can be placed in trust. Financial assets such as investments, bank accounts, and retirement funds are commonly placed into trust, but a trust can also include business assets, real estate, cars, trucks, boats, life insurance policies, and valuable material goods such as antiques, artwork, collectibles, and family heirlooms. Even certain types of intellectual property, such as patent rights, can be placed into a trust. Your Costa Mesa estate planning attorney can help you understand which assets can be protected by a trust and how best to convert or otherwise protect those that cannot.