What is a trust?
Phoenix, AZ estate planning attorney Chikk Myers talks about everything that usually goes into creating a trust.
Phone: (602) 234-1178
A trust, basically, is a contract between the settlor who creates the trust, the trustee who’s in charge of managing the money, and the beneficiaries. Typically, in estate planning we use a revocable trust. Husband and wife will set up a revocable trust to hold their assets to avoid probate. But they only can avoid probate by properly transferring all of their significant assets to the trust.
The problem we often run into is they are left with the understanding by some lawyers that if you have a trust there’s nothing you need to do upon the death of one of the spouses. That’s not true there are still certain tax advantages that can be accomplished by looking at the assets as of date of death and getting them valued in order to get a step up ____ in the assets, which will decrease the tax burden upon the disposition of the assets subsequent to the death of the first spouse.
So it’s real important that they understand what a trust accomplishes and all the different types of revisions that you can have in a trust such as giving it outright to your children or placing it into trust and allowing it to draw certain amounts after a passage of time or upon attaining certain ages. What if they die before their trust is terminated? So there’s a lot of considerations that go into the trust planning aspect.