What Is A Trust?

A trust is an written agreement or contact. Once a trust is signed, assets are placed into trust and held by a Trustee for the benefit of beneficiaries that you name. You can create your own trust online with GeauxPlans.

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!

Not sure where to start?

Tell us about yourself and we'll match you with the right plan!
#1 Choose Your State

If you spend time in more than one state, use the state where you are registered to vote, or maintain a driver's license, or intend to return if you are temporarily residing in another state.

#2 Are you married?
#3 Do you want to plan for what happens when you die?

You get to decide who's in control after you die, who gets your assets, and when, as well as who cares for children, etc.

#4 Do you own any real estate in the state of Louisiana?
#5 OK, so probate will be required in Louisiana. It's a bit more work, but do you want to avoid the probate process by transferring your assets to a Living Trust?

GeauxPlans can walk you through the process - step by step.

#5 Do you own probate assets worth more than $125,000?

Probate assets include property that passes by beneficiary designation or that isn't already in a trust. Put another way, probate assets do not include life insurance or annuity proceeds (unless your estate is the beneficiary), retirement assets, usufruct or life estate property, and other assets with named beneficiaries, such pay on death accounts.

#6 Do you have any minor children?

Include both biological and legally adopted children.

What Is A Trust?
What Is A Trust?
What Is A Trust?
#4 If you lose capacity, do you want someone you trust to make financial or healthcare decisions for you?

Incapacity can result from any of the following:

  • Accidents
  • Injuries
  • Medical conditions
  • Degenerative diseases
  • Anything that can cause you from acting on your own behalf, whether temporarily or permanently

If something happens to you, someone should be able to make medical and financial decisions for you, like taking care of bills and other financial obligations, consenting to medical procedures, making care arrangements, and accessing proctected health information.

What Is A Trust?
#5 Do you need authority to make financial or medical decisions for another person?

For example, a college student who is no longer a minor, or an elderly person (perhaps a parent) may need assistance with financial or medical decisions.

#6 Do you seek privacy or improved control of your assets during life?

For example, do you wish to:

  • Minimize or avoid any public record or information about personal assets?
  • Shield any public information from creditors or predators?
  • Keep assets segregated as separate property in the event of a second marriage?
#7 It sounds like you need some advice.

GeauxPlans is owned and administered by an estate planning law firm. If you have questions or would like a complimentary consultation, please submit your inquiry.

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.

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Call us: +1 (855) 213-6300