Trustor is the title provided to people who setup a trust. Individuals can transfer ownership of their property to a trust as a way to avoid probate and lessen estate tax. An individual known as the Trustee is appointed to control assets and settle the estate upon death.
The title of Trustor is included with most types of trusts such as living, testamentary, land, and irrevocable life insurance. Each of these serves a different purpose, but all allow estate assets to be distributed to heirs without passing through probate.
Probate is perceptive one of the least understood legal processes. Many people do not realize that regardless of whether they prepare a Will or not their estate has to undergo probate. Leaving a Will will make the process simpler and takes less time.
When a person dies, everything they own is held in probate until the legal process is completed. Only then can inherit gifts be transferred to heirs. The only way to avoid probate is to transfer ownership of property to a trust.
Living trusts are one of the most commonly used estate planning strategies. Property that is transferred into revocable trusts is controlled by the Trustor until death. At that time, a successor takes over and shares property to beneficiaries which are named in the decedent's last Will.
While living trusts can be setup without help from a lawyer, most people feel better about hiring a law firm or estate planner. Those who choose to take on the task without legal help bought to take time learning about the various options to ensure their property is protected.
A trusted source for acquiring estate planning information and forms is Nolo.com. This website provides a variety of self-help legal tools including do-it-yourself will and trust kits and services that allow people to create estate planning documents online.
Testamentary trusts refer to a legal entity that is created in accordance with directives provided in the decedent's Will. This type of trust is established to deal with estate assets acquired through the decedent's life or as a result of their death.
For example, if there is some kind of legal litigation that result in payment after their death, such as a wrongful-death lawsuit, a testamentary trust could have been set up to manage the assets.
Land trusts are established to safeguard real property against legal actions initiated by others and to avoid probate. Real estate investors often use this estate planning strategy due to the protection and privacy they provide. Due to the fact that people usually can not sue a trust, all property that is transferred into land trusts is shielded from judgments or liens.
Furthermore, real estate trusts provide beneficies with tax advantages and make it easy to take possession of property bequeathed to them. Land trusts are a good option for people who plan ahead for incapacity. A co-Trustee can be appointed to oversee the trust in the event the Trustor is declared incompetent by a physician.
Irrevocable life insurance trusts (ILIT) are a special type of trust that is used to take out life insurance premiums from decedent estates. This type of trust must be arranged by an attorney to avoid tax consequences.
Due to the complexities of transferring assets to trusts it is recommended to work with qualified professionals. Otherwise, Trustors may unintentionally create avoidable problems that result in higher estate taxes.