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When you start planning your estate, you might consider putting your assets into trusts for beneficiaries. Though this may be the best way to distribute your funds, you might have a lot of questions regarding trusts. The following are three common questions, as well as the answers to help you begin to understand.
- What Is the Difference Between a Will and a Trust?
If you have a will, you may feel that’s sufficient, but a trust is an entirely different estate planning tool. A will is something in which you outline how you want your estate to be handled after you pass away. It goes into effect after your death. A trust is also something that outlines how your estate should be handled, but it goes into effect the moment it is legalized. If you want to distribute property right now, you can place it in a trust and your trustee will distribute it to your beneficiaries as you have outlined in the trust.
Another difference is wills cover all property and assets you own at the time of your death unless it is in a trust. A trust only covers property that has been specifically placed in it. There are other differences as well, and your attorney can explain those more in depth.
- Can I Loan Money From a Trust To a Beneficiary?
Your trustee can only loan money to beneficiaries if the documents specifically state that as an option. There are still formal procedures that must be met for this to happen, including the trustee doing a little research into the beneficiary before approving the loan. For example, if a trustee checks into the beneficiary’s employment and realizes he or she has no way to repay the loan, the trustee can actually deny the loan request. Trustees will also create an interest conflict if they try to loan themselves money as beneficiaries.
- Who Should I Choose as a Trustee?
Many people who create trusts choose someone close to them as the trustee. This might be a friend or family member with whom the individual agrees on many things financially, as well as someone who understands the family dynamics of the person creating the trust. If you are to choose a trustee for a trust, you might start there. You could also pay for a professional trustee if you’re worried about resentment or contention within your family.
Learning All You Can About Trusts
If you’re working on your estate plan, you may want to add a trust. Contact a living trust lawyer today, like the best trust lawyer from Kamper & Estrada, PLLC, to learn more about them and how they work.