Legally Speaking What Is A Trust And Why Do I Need One? By Scott Berry- Berry Law Offices A Trust is a written agreement that sets up spedificrules about how property and assets that have been transferred into the Trust are to be administered and distributed. There are basically two types of Trusts that are relevant to families with minor children ()a living trust; and ()a testamentary trust Aliving trust is created and funded while you are alive. When created, a living trust can be rewecable or irrevocable. However, in most cases, in order to allow you to properly manage your property and assets held by the Trust we suggest that the living trust you create be revocable. This llows you to change the trust, add to the trust, take assets from the trust or terminate the trust anytime you want. An irrevocable trust does not allow you this flexibility Why Establisha Living Trust? 1.Avoid Probate. Because your living trust is a private contract between you (as the person creating the trust) and the trustee (the person administering the trust) any assets titled in the name of your trust at the time of your death will avoid probate. 2. Accelerate Distributions to your Beneficiaries. Because your living trust is not required to proceed through the tedious court process of probate, your assets and peoperty are alble to be disbursed to your beneficiaries almest immediately if necessary. 3.Keep your Estate Plan Private. Unless your benehciaries and sucessor trustee get into a dispute requir- ing judicial intervention, your living trust will not be filed with court because the assets and property titled in yourliving trust pass without the need to be probated. In contrast, if you just have a will, your will must be filed with court and probated in order to pass your property and assets to your beneficiaries 4.Cost Savings to yeur Beneficiaries. Typically the cost to administer your living trust is significantly less than the cost to administer your will through the court probate process 5.Planning for Disability or Incapacity. If youshould become incapacitated or incompetent,a living trust willavoid the need for the establishment of a conservatorship. Aconservatorship is a court peoceeding brought for purposes of managing your financial affairs if you are unable to doso. Threughyour living trust you can specify how your mental incapacity should be determined, like by a letter from your treating physician Conversely, a testamentary trust is established through your will or trust with provisions to be carried out after your death. In most cases, unless you establisha testamentary trust to manage the shares of any beneficiary who is a minor, the courts willrequirethat a conservatorship be established to administer your minor beneficiaries' share ofyour estate. Not only is this anadditional cost that is assessed against your mine beneficiaries' share of their estate, but your minoe benehciaries will automatically receive their share of your estate when they turn 18. You need to carefully assess your beneficiaries financial maturity, whether or not they are minors, to determine their ability to manage their financial affairs. In most cases, induding a testamentary trust in your willor living trust it is necessary to be sure yourvalues, as it pertains to the disbursement ofyour estate to your beneficiaries, are achieved. Through the establishment of a testamentarytrust, you are able tomake discretionary or non-discretionary disbursements. Discretionarydisbursements indude those disbursements over which you want your trustee to have discretion to make. For example, you may want to allow your trusteeto make disbursements toyour beneficiaries for such things as educational expereses purchasing a house or starting a new business. A tes tamentarytrust can be customized to allow for such discretionary disbursements by your trustee induding limiting how the disbursements can be used as well as the amount that can be disbursed Non-discretionarydisbursements include those disbursements which are able to compel through the provisions of your trust. An example of a non-disaretionary distribution peovision indludes a mandatory distribution toyour benefciaries when they attaina spedficage or withholding distributions to your benef- diaries if they are engaged in some activity for which you are opposed. Call Pete or Scott for an appointment (763) 389-0178 Additional Questions? Call or email Scott or Allison to schedule a free appointment. dsberry@berrylawoffices.com alondgren@berrylawoffices.com 206 South Rum River Drive Downtown Princeton 763-389-0178 BERRY LAW OFFICES Contact Scott Berry Attorney at Law Legally Speaking What Is A Trust And Why Do I Need One? By Scott Berry- Berry Law Offices A Trust is a written agreement that sets up spedificrules about how property and assets that have been transferred into the Trust are to be administered and distributed. There are basically two types of Trusts that are relevant to families with minor children ()a living trust; and ()a testamentary trust Aliving trust is created and funded while you are alive. When created, a living trust can be rewecable or irrevocable. However, in most cases, in order to allow you to properly manage your property and assets held by the Trust we suggest that the living trust you create be revocable. This llows you to change the trust, add to the trust, take assets from the trust or terminate the trust anytime you want. An irrevocable trust does not allow you this flexibility Why Establisha Living Trust? 1.Avoid Probate. Because your living trust is a private contract between you (as the person creating the trust) and the trustee (the person administering the trust) any assets titled in the name of your trust at the time of your death will avoid probate. 2. Accelerate Distributions to your Beneficiaries. Because your living trust is not required to proceed through the tedious court process of probate, your assets and peoperty are alble to be disbursed to your beneficiaries almest immediately if necessary. 3.Keep your Estate Plan Private. Unless your benehciaries and sucessor trustee get into a dispute requir- ing judicial intervention, your living trust will not be filed with court because the assets and property titled in yourliving trust pass without the need to be probated. In contrast, if you just have a will, your will must be filed with court and probated in order to pass your property and assets to your beneficiaries 4.Cost Savings to yeur Beneficiaries. Typically the cost to administer your living trust is significantly less than the cost to administer your will through the court probate process 5.Planning for Disability or Incapacity. If youshould become incapacitated or incompetent,a living trust willavoid the need for the establishment of a conservatorship. Aconservatorship is a court peoceeding brought for purposes of managing your financial affairs if you are unable to doso. Threughyour living trust you can specify how your mental incapacity should be determined, like by a letter from your treating physician Conversely, a testamentary trust is established through your will or trust with provisions to be carried out after your death. In most cases, unless you establisha testamentary trust to manage the shares of any beneficiary who is a minor, the courts willrequirethat a conservatorship be established to administer your minor beneficiaries' share ofyour estate. Not only is this anadditional cost that is assessed against your mine beneficiaries' share of their estate, but your minoe benehciaries will automatically receive their share of your estate when they turn 18. You need to carefully assess your beneficiaries financial maturity, whether or not they are minors, to determine their ability to manage their financial affairs. In most cases, induding a testamentary trust in your willor living trust it is necessary to be sure yourvalues, as it pertains to the disbursement ofyour estate to your beneficiaries, are achieved. Through the establishment of a testamentarytrust, you are able tomake discretionary or non-discretionary disbursements. Discretionarydisbursements indude those disbursements over which you want your trustee to have discretion to make. For example, you may want to allow your trusteeto make disbursements toyour beneficiaries for such things as educational expereses purchasing a house or starting a new business. A tes tamentarytrust can be customized to allow for such discretionary disbursements by your trustee induding limiting how the disbursements can be used as well as the amount that can be disbursed Non-discretionarydisbursements include those disbursements which are able to compel through the provisions of your trust. An example of a non-disaretionary distribution peovision indludes a mandatory distribution toyour benefciaries when they attaina spedficage or withholding distributions to your benef- diaries if they are engaged in some activity for which you are opposed. Call Pete or Scott for an appointment (763) 389-0178 Additional Questions? Call or email Scott or Allison to schedule a free appointment. dsberry@berrylawoffices.com alondgren@berrylawoffices.com 206 South Rum River Drive Downtown Princeton 763-389-0178 BERRY LAW OFFICES Contact Scott Berry Attorney at Law