When you create an estate plan, one of the vehicles you can use to manage your assets either during your lifetime or after your death is a trust. There are several types of trusts available depending on your circumstances and how you want to manage your estate. Two of the most common trusts used in estate planning are testamentary trusts and living trusts.
Testamentary Trust
When you create a testamentary trust, the trust is embedded in your Will and it does not exist until your death. Because the trust is in your Will, you can revoke it anytime during your lifetime by creating a new will. Once you die, the testamentary trust becomes irrevocable and is funded as a part of the Probate process. A testamentary trust is often referred to as a trust under will.
Testamentary trusts are commonly used for estate planning if you don’t want to create a revocable living trust and fund it during your lifetime but need to provide for minor children, someone who is not responsible with money, or to create a Special Needs Trust for a beneficiary who receives government benefits.
Living Trust
A living trust can be revocable or irrevocable. Most living trusts are revocable and are set up to avoid probate and allow efficient settlement of your estate, to provide privacy, or to create a mechanism for managing your estate should you become incapacitated. With a revocable living trust, you, the Grantor, retain the right to amend the trust and in most cases, to manage the trust. This allows you to add or remove beneficiaries, change the distribution of your assets, and make other changes appropriate for your family and your estate plan. You can also replace the trust or dissolve it at any time. Once the grantor – the maker of the trust – dies, the revocable trust becomes irrevocable and can no longer be changed.
An irrevocable living trust, is one where the grantor does not have the right to make changes to the trust once created. In addition, you, the grantor, are not the trustee and are not able to control of the trust once it is funded with money and assets. The named trustee controls the assets in the trust and distributes the assets to the beneficiaries of the trust under the terms the grantor established. While the grantor cannot be the trustee of an irrevocable trust, the grantor can be a beneficiary of the trust if being a beneficiary is appropriate.
Contact Us
At Grissom Law, we work with clients to understand their family, assets, and specific needs and to determine if a trust should be a part of their estate plan. Call us at 678.781.9230 to schedule a time for us to meet with you to discuss your estate planning needs.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.