Trusts

A trust is a legal arrangement that helps ensure that your assets are protected and distributed properly. They consist of a trustee, beneficiary, and a grantor, all of whom are crucial in helping protect the assets from probate and ensuring the owner of the trust’s wishes are met. Trust documents need to go through the proper channels in order to remain legally binding for years to come. The owner of the property will give their property or transferable right to another to manage. This can be done after the owner, also known as the trustee, passes away or if the owner is no longer able to make cognitive decisions about their property.

KNK Law has the needed expertise to help clients formulate wills and trusts that will help them protect their most important assets. Our attorneys can help you add this additional document to your will as part of an estate plan. The options and complexities of a trust are often confusing to the untrained eye. Letting our legal team help you craft and execute a will and trust will ensure that any trust or will option will have your best interests in mind. You can feel confident in the distribution and handling of your assets when you work with our legal experts at KNK Law.

Those Involved In A Trust

Many people are involved in the creation and execution of a trust, but there are three crucial parties that you should understand before setting up this legal document.

• The Grantor: Also known as the settlor or trustmaker, this is the person who creates and funds the trust. Their assets are put into the trust, and then they define the rules of how the assets are handled.
• The Trustee: Could be an individual or an institution that holds the legal title to the assets. The trustee is the manager of the trust and must follow all of the documents’ terms. 
• The Beneficiary: The person or entity that receives income, assets, or principal from the trust. These assets are typically distributed after the grantor’s death. 

All of these parties will work together to ensure that assets are protected and distributed according to the grantor’s wishes. Even if you have crafted a trust many years ago, setting up a trust with the best legal team will ensure it still stands down the road. Finding a legal team that is skilled across multiple areas will help you feel supported through all phases of your case or document creation.

Irrevocable And Revocable Trusts

Different types of trusts will provide a number of benefits for specific parties. No matter what you are trying to achieve, there are trust options that can support your wishes. The two most common and basic trust structures are revocable and irrevocable trusts. 

Revocable trusts are also referred to as a living trust. This type can be altered and edited after creation, in case your life or situation changes. Those who choose a revocable trust help you to avoid the probate process because there will be clear guidelines on where your assets go. Because revocable trusts can be altered, you are still considered the owner of the assets, even though you have determined a trustee. You will still be responsible for making tax payments on your assets and reporting on the trust’s investments. 

Irrevocable trusts, on the other hand, can not be changed after creation. The assets are removed from your estate, and the trust pays its own income tax and files a different return. There are subcategories under irrevocable trusts, including one called a testamentary trust that is set up with your will. Other subcategories of irrevocable trusts include:

• Irrevocable life insurance trust
• Grantor retained annuity trust (GRAT
• Qualified personal residence trust (QPRT)
• Charitable remainder annuity trust
• Special needs trust
• Generation skipping trust

Irrevocable trusts can help you meet specific needs, like transferring wealth to the next generation, minimizing estate taxes, transferring your assets to a charity you support, or keeping a family business in your family line.

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Mandatory And Discretionary Distributions

Depending on the conditions of your trust, you may need to have distributions over time to multiple beneficiaries. A mandatory trust distribution may require the trustees to distribute part of the assets throughout the year. A specific amount of money or property may need to be distributed on a special date, such as an 18th or 21st birthday. Mandatory distributions will be described in the trust document to avoid legal liability or breaching fiduciary duties.

Discretionary trust distributions do not need to be made by the trustee. They get to decide when to distribute money or assets to certain beneficiaries. If the assets aren’t earning interest or a beneficiary falls on hard times, the trustee can decide to distribute certain assets for their benefit or the benefit of other people. Discretionary trust trustees need to keep careful records of distributions over time.

Legal Insight From Kaufman, Nichols, and Kaufman

Located in Ogden, UT, our divorce, estate, and family lawyers can help you find better peace and financial stability. We have helped hundreds of clients get the best legal results possible because of our wealth of expertise. When it comes to your future and your precious belongings, sound legal advice is the best way to avoid further legal issues. We are proud to be a part of the local community and help clients have a better peace, protected assets, and avoid criminal convictions. 
KNK Law has been serving the Ogden community since 1979, and has continued to provide residents with quality legal help for specific cases. We know that different disputes or cases can be emotionally draining, so having someone on your side who can support you every step of the way can bring relief. Reach out to our attorneys to learn more and schedule an appointment today!