How Does a Trust Work?
First, you sign a document with basic rules about how your Trust should be managed, administered and distributed.
Next you transfer assets into the Trust (by deed, assignment or similar document).
Then, you live. During your life you can put more property in or take it out of your Trust, and you can use and spend those assets or even just the income off those assets, if you like. And during your life, if something changes or you just change your mind, you can change your Trust.
Flexible and Powerful; after your passing —
- The Trustee can manage and distribute assets from your Trust WITHOUT months and thousands of dollars of probate and going through a court of law for administration and supervision;
- To be sure, your Trust can pass along all types of assets:
- Real estate;
- Accounts and investments;
- Retirement accounts;
- Life insurance can fund into your Trust so that the lump sum coming from the insurance policy is managed and distributed according to the rules you put in your Trust;
- Family business ownership (stock or LLC units of ownership) for planned business succession; and
- Manage tough-to-divide assets for a time so that they may be enjoyed or income realized for a time before being sold (and perhaps divided then)(vacation cabin, boat, RV, mineral interests)
- Of course the Trust assets can be used by your remaining immediate family (and/or others if you like) and provide structured, dependable income to care for day to day AND extraordinary needs;
- Finally, Trust assets can be distributed in the way you set forth when you signed the Trust (here are only a few examples):
- Lump sum
- For educational needs
- Portions at age 22, 25, 30 or any ages you choose
- To a person with special needs to help them out without disqualifying them from other benefits
Yes, a Trust can sound complicated at first, but after all this explanation, What does a Trust do? It works, it works well, and it can do a lot of things efficiently.
I hope this helps you. I’m Dan Covington. You can always find me at Estate Plan Kansas.