Different Types of Trusts

Living or Testamentary Trust
Living Trust:
It is created while you are alive and allows you to manage your assets during your lifetime. You can change it or cancel it if it’s revocable. It helps bypass the probate process when you pass away
.
Testamentary Trust:
Set up as part of your will and only comes into effect after you die. It can’t be used to manage assets while your alive and doesn’t avoid probate.

Funded vs Unfunded Trust

You can have a trust with nothing in it. You have to put your assets into the trust. 
 
Funded Trust:
This trust has assets put into it. For example, you transfer money, real estate, or stocks into the trust while you’re alive. The trust actually holds these assets and receives the benefits of the trust.
 
Unfunded Trust:
This trust is set up but doesn’t hold any assets.

Revocable vs Irrevocable Trust

Revocable Trust:
You can change or cancel this trust while you’re alive. It is flexible letting you adjust as your situation or intentions change.
 
Irrevocable Trust:
Typically irrevocable trusts can’t be changed or cancelled once they have been established.

A revocable trust typically becomes irrevocable upon the death of the trustor, the person who creates the trust.

Estate tax benefits: Assets placed in an irrevocable trust are typically removed from the trustor’s taxable estate.

What is your Role as a Trustee?

Fiduciary Duty: 
To act in the best interest of the beneficiaries of the trust. This means that the trustee must always act with loyalty, prudence, and care when managing the trust’s assets and making decisions on behalf of the beneficiaries. 

 

Asset Management:
Managing the assets of the trust, including investing the assets in a manner that is consistent with the trust’s objectives and the beneficiaries' best interest.

 

Record-Keeping: 
Keep accurate and complete records of all transactions related to the trust and provide regular accounting to the beneficiaries. 

 

Communication:
Communicate with the beneficiaries and keep them informed about the trust’s activities, as well as any changes to the trust’s terms or administration. 

What are your Duties as a Trustee?

Duty of Loyalty:
Act in the best interest of the beneficiaries and avoid any conflicts of interest.

 

Duty of Prudence:
Manage the trust’s assets with reasonable care and diligence taking into account the risk and return objectives of the trust and the needs of the beneficiaries. 

 

Duty of Impartiality:
Must treat all beneficiaries fairly and impartially, regardless of their relationship to the grantor or other beneficiaries. 

 

Duty of Confidentiality:
Keep all information related to the trust and it’s beneficiaries confidential, except as required by law.

 

Duty to Follow the Trust Instrument: 
Follow the terms of the trust documents and any applicable laws and regulations when managing the trust’s assets and making decisions on behalf of the beneficiaries.