What Is A Trust?

What is a trust? Many building an estate plan wonder the same thing and whether a trust is right for them. You can create your own trust online with GeauxPlans, but you need to understand the basics about trusts in order to make informed decisions.

Our mission at GeauxPlans is to cut through the noise to make your estate planning journey easy and affordable. We hope this article will explain some basic concepts about trusts to help you make better choices about your estate planning.

What is a Trust?

Here’s the short answer to the question: what is a trust? A trust is basically an agreement or a contract that is governed by a Trust Code. Once the trust is signed, assets are placed into trust. The process of placing assets into trust is referred to as “funding” a trust. Once the trust is funded, assets are held and administered by a Trustee for the benefit of Beneficiaries.

The person who creates a trust is referred to as a “Settlor” or “Grantor”. The person who manages a trust is referred to as a “Trustee.” “Beneficiaries” are entitled to benefits of the trust. A beneficiary can be an individual or an organization like a charity. The same person can be a Settlor, Trustee, and Beneficiary.

Benefits of a Trust

A trust can provide a strong layer of protection for beneficiaries and may even help to lower your estate taxes. They offer a number of benefits to anyone regardless of income, such as avoiding the cost and burden of probate, improved control over assets during life, asset protection for beneficiaries, privacy, and relative anonymity, minimizing potential disputes, maintaining control, and providing for the orderly administration of your affairs. Trusts are useful because they simplify the process of distributing your assets and ensure that they are safe and secure.

Setting Up A Trust

Establishing a trust is a great way to secure your assets and keep them away from the wrong hands. You decide if you want to put all of your assets or some of your assets into a trust. Trusts are useful because they simplify the process of distributing your assets and ensure that they are safe and secure.

Kinds of Trusts

There are many types of trusts, so it can be confusing to figure out which one is best for you. GeauxPlans can help you choose the right one to meet your and your family’s needs.

There is a longer answer to the question: what is a trust? Trusts are like ice cream. There are a million different flavors each tailored to the individual, but here are a few broad categories of trusts.

Testamentary Trust

A Testamentary Trust is trust that is established by a Last Will and Testament. The person who creates a Last Will and Testament is referred to as a “Testator.” A Testamentary Trust doesn’t provide any benefits for the Testator because it is established upon death. A Testamentary Trust can provide benefits for a surviving spouse and other named beneficiaries, such as children of the Testator.

Living Trust

A Living Trust holds your assets while you are alive. An individual can decide how their assets are managed. After your death, the assets in the living trust are then transferred to your beneficiaries or the charity of your choice. Because it allows you to bypass probate, it is a simple way of ensuring that your assets are distributed in a hassle-free manner.

There are two types of Living Trust: (1) a Revocable Living Trust; and (2) an Irrevocable Living Trust.

Revocable Trust

A common type of trust that many people choose to keep their assets safe is a Revocable Trust. This type of trust is beneficial because the terms can be amended, or modified. The trust can also be revoked or terminated by the person who created it. Hence, the term “revocable trust.” The flexibility of a revocable trust allows the Settlor or Grantor to make necessary changes after important family events like marriage or the death of a loved one, as well as a change in finances, health, or even law.

Irrevocable Trust

An Irrevocable Trust is a trust that cannot be revoked. A common misunderstanding is that an Irrevocable Trust cannot be amended. This is not correct. An Irrevocable Trust can be amended or modified, subject to limits of applicable state law.

An Irrevocable Trust is usually appropriate when asset protection or Federal estate taxes are a concern for the Settlor or Grantor.

Online Trust

An Online Trust is just what it sounds like. It’s a trust that you create online. You can create your very own Testamentary Trust or a Living Trust online right now with GeauxPlans!

Is a trust right for me?

A trust is a little more work and a little more expensive on the front end, but a trust can save a lot of money and hassle in the long run.

If you are not sure whether a trust is right for you, take our quiz!

We hope this answers the question: what is a trust? If you still have questions, please contact us. Our support team stands ready to assist you.