What is a Trust? - Trusts are sometimes called Revocable Trusts or Inter-Vivos Trusts. A Will must be administered through probate court whereas a Trust avoids probate court. In addition, a Will becomes public record whereas a Trust remains private. A Trust must be properly funded to be effective. Funding simply means that the property (real property, car, investments, bank accounts, furniture and personal property etc.) that you wish to be distributed to your heirs/beneficiaries must be titled in the name of the Trust. Some people make the mistake as having a Trust prepared but they fail to fund the Trust. Furthermore, at your death your property can be transferred without attorneys, the court system or probate which could be more timely and costly.
Do I lose control over my assets once they are funded to the Trust? - Not if you have a Revocable Trust. A Revocable Trust allows you to transfer all of your property (real property, car, investments, bank accounts, furniture and personal property etc.) to the Trust but continue to use and manage them during your lifetime. After your death your Trustee will transfer ownership of the assets/property to the heirs/beneficiaries named in the Trust.
Whom can I appoint as the Trustee? - You can serve as your own Trustee, you and your spouse can be Co-Trustees or a trusted family member or friend may serve as Trustee. When deciding whom to select as Trustee, you should consider whether they are worthy of your Trust and are willing to accept the job. You should also name at least one alternate/successor Trustee in the event the you, your spouse or the other first named person is unable to serve as Trustee for whatever reason.
How do I fund the Trust? – A deed to your real property must be prepared, signed and recorded with the Clerk of Court. This transfers title of the real property to the Trust. If you have bank accounts, savings account, CDs etc. you must change the ownership of the account by changing the signature card at the institution which holds the account. If you have stock brokerage accounts, or mutual fund account you must instruct your broker to transfer your stocks and bonds into the name of the Trust. I prepare a document which transfers all personal property into the Trust. If you wish to have life insurance proceeds go to the Trust you must tell your insurance agent to assign your life insurance policies to the Trust.
What are the tax implications to having a Trust? - A simple Trust does keep your property out of probate court but it does not mean that you pay no income tax. Furthermore, it does not mean that the assets in the Trust are out of the taxable estate for federal estate tax purposes. To accomplish tax savings of either kind, there are a variety of more complicated Trusts which are available. For the Revocable Trust you would be taxed just as if the Trust property were owned in your individual name and as if no Trust existed.