Trusts

A trust is an agreement that creates a fiduciary relationship between a person who holds title to property (the “Settlor”) and another person for whom the property is held in the trust (the “Beneficiary”). The Settlor will create and fund the trust and designate someone to protect and control the property during the Settlor’s lifetime and after the Settlor passes away (the “Trustee”). The Trustee is responsible for maintaining, investing, and eventually distributing the property. The most commonly used trusts are revocable or irrevocable. A revocable trust can be changed or revoked by the creator of the trust, typically called the settlor. An irrevocable trust cannot be amended by anyone, including the settlor.

Trusts can be used as an effective substitute for the probate process because trusts allow an individual to have their estate administered through the trust rather than through the courts. A trust will be administered pursuant to the provisions within the trust rather than default probate laws. Another advantage to having a trust is that it can be kept completely private, with only the settlor and the trustee knowing of its existence and its terms. On the other hand, when your estate is probated, the estate becomes public record. In creating a trust, you may prevent disgruntled family members from making frivolous claims against your estate. Another key benefit of creating and depositing property into a trust is that the property can be protected from your beneficiaries’ creditors.

The trustee is liable to administrate the trust according to its terms. If the trustee breaches the trust, only a designated beneficiary can bring a claim against the trustee for beach of their fiduciary duties. So, a trustee should be someone that you trust very much as you are essentially making them the manager of whatever property you have put into the trust. You should also designate a successor trustee in the event that the selected trustee can no longer perform their duties, whether because of death, incapacity, or a different reason.

If you have any questions or have any interest in creating a trust for your property, please contact McNeelyLaw LLP by calling (317)825-5110.

Disclaimer: This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.