Under the eyes of the law, trusts are separate and unique entities, and this is why they are incredibly useful estate planning tools. Trusts can be set up to accomplish a variety of goals. All trusts involve a trustor, one or more beneficiaries and one or more trustees.
Understanding Trust Basics
It does take time, intention and the help of a thoughtful attorney to establish a trust, making the process a bit more intensive then writing a will. However, because trusts can be set up to specifically address a variety of goals, they can prove to be a solid anchor of estate plans. Establishing a trust even enables us to plan for our own needs as we age. Trusts also allow property to by-pass the public probate process, ensuring efficiency and privacy in the gifting of assets to loved ones, charitable organizations and pets. Here’s a helpful overview of the legal structure of trusts:
A trust is a designated legal entity or arrangement that holds property and assets for the benefit of another party. A trust is considered to be a separate and unique entity in the eyes of the law, with its own distinctly defined rights (much like a separate “person”). There are three primary roles within the trust entity: the “trustor,” the “trustee” and the “beneficiary.” The trustor gives the trustee (within the context of the trust itself) the right to hold title to and control or manage the property and assets within the trust. The “beneficiary” of the trust receives the benefit of the property and assets within the trust itself. Trusts may be described by the timing associated with their creation. For example, a “living trust” is created for and used during the grantor’s lifetime….
Trusts can be established as “revocable” or “irrevocable,” and each type has advantages. Clearly, a revocable trust offers the grantor more flexibility, while typically, irrevocable trusts can better shield assets and protect assets. When making decisions about which type of trust is best, clarity on family circumstances is essential. For example, if qualification for public entitlements, like Medicaid, could become a necessity with age, an irrevocable trust can be very helpful. In a nutshell, the differences between revocable and irrevocable trusts are:
In a revocable trust, property and assets can be placed into the trust or removed (revoked) from the trust at any point in time. In an irrevocable trust, property and assets placed within the trust cannot be revoked by the grantor once the legal entity of the trust is established and the assets are placed within it. Irrevocable trusts provide specific types of protection for the assets within the trust as well as potential tax advantages for the grantor.
In essence, a trust is utilized to reduce liabilities associated with the ownership of real property and significant assets. The trust entity provides an additional layer of protection for the assets it contains while, in some cases, also limiting a creditor’s access to those assets to settle debts or legal judgments.
Understanding The Trustee Role and Trustee Bonds
When trusts are established, trustees are named to administer the assets in them, based on the arrangements specified in the trust agreement. Trustees have fiduciary obligations and are held to exceptionally high legal standards,“the most important of which are the duties of loyalty and care, and the duty to act in accordance with the terms of the trust agreement.” Given the seriousness of the role, trustee bonds are often required. Essentially, a trustee bond is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain trustee bonds: Just get a quote online, fill out the information, and enter a payment method. Then, simply print or e-file the bond from anywhere.
Trust and Estate Law Practice?
Speed things up whenever and wherever a bond is needed. With a few clicks on you’ll arm your clients with exactly the bond needed.
Just log in to The Partnership Account® for Attorneys, choose a bond, send it to your client for payment, then download, e-file or print the bond. Specific obligee requirements? Trust us: Colonial’s a direct bond writer, so our experts are here to ensure obligee requirements across the country are properly met.
Our fiduciary bond portfolio includes: administrator, estate, executor, guardian, personal representative, probate, surrogate, trustee, conservator and the list goes on. Our court bond portfolio includes appeal, supersedeas, injunction, replevin, receiver and more.
Speedy, easy bonds court and fiduciary bonds, right here:
The Partnership Account® for Attorneys.
Colonial Surety is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed for business everywhere in the USA. Our customers have awarded us a 4.8 Trustpilot score.