Trusts have many different purposes from estate planning to protecting assets and providing for family members. They are legal documents that create a fiduciary duty between you and the trustee whereby the trustee holds title to assets, manages those assets, and distributes those assets in accordance with the provisions set forth in the trust agreement.
What is a Trustee?
The trustee is the person or company you choose to manage the trust. It can be a family member, close friend, attorney, or company. Whomever you choose as your trustee, it should be someone who understands your intentions in creating the trust and someone who you know will carry out your wishes in accordance with the terms and conditions you set forth in the trust agreement.
While a trustee can retain professionals to assist with the accounting requirements and the investment of assets of the trust, the trustee must supervise all distributions from the trust. Duties of a trustee include:
- Managing the assets of the trust;
- Investing the assets of the trust to generate funds for the trust;
- Maintaining adequate books and records for the trust;
- Filing the required tax returns for the trust;
- Distributing assets from the trust in accordance with the trust agreement; and,
- Filing all required court documents associated with the trust.
If this role is held by an individual, it is often helpful to have an attorney to assist the trustee in his or her duties. Depending on the type of trust agreement and the specific duties outlined in the trust agreement, some trustees can become overwhelmed with the legal requirements of managing, investing, and distributing trust property. The experienced trust attorneys of Lovett & House are here to assist you in performing your duties as trustee. Call our office to schedule an appointment to discuss how we can help you.
Why Should I Create a Trust?
There are many reasons why someone may wish to create a trust; however, the main reason is to control his or her assets in the event of death or disability. Estate planning encompasses much more than drafting a will. With proper estate planning, you remain in control of your finances during your lifetime and after your death. Trusts can help you accomplish both of these goals. Because there are many types of trusts available, you should discuss each of your options with a qualified lawyer before making a final decision on what type of trust will accomplish your goals.
Below are some common goals you may want to consider when establishing a trust.
When you die, your assets are distributed to your heirs. Some people do this through a will while others allow the state to decide who will receive their property. Depending on the estate and the issues involved, the probate process can be long, expensive, and a matter of public record. The process is controlled by the probate court with every transaction being reviewed and approved by the court. In some cases, the probate process can tie up assets for months or even years thereby denying surviving family members the access to money they need to pay living expenses. If there are matters that must be litigated, such as objections by heirs, contested claims against the estate, or other probate litigation, the court could freeze the assets until the pending issues are resolved.
By utilizing a trust agreement, you can make it possible to distribute your assets to your heirs without the intervention of the probate court. There are also strategies for avoiding estate taxes by using a trust to distribute your property upon your death. Our trust attorneys can explain in detail how you can make it possible for your spouse, children, and other family members to receive your property without the time-consuming and sometimes expensive process of probating your estate. In addition, your financial affairs will remain a private family matter rather than open to the public.
Protecting Your Assets If You Are Incapacitated
No one wants to consider the possibility that he or she could become incapacitated; however, it can happen. A sudden illness, car accident, or other medical condition can render you unable to manage your financial affairs. Many people are under the mistaken assumption that if they are incapacitated, their family members automatically have the legal right to manage their finances. Unfortunately, a family member must petition the court to have a person ruled as incapacitated and request that the court appoint him or her to manage the person’s assets. This process can be costly and time-consuming.
With the proper trust agreement, you can plan for the possibility of incapacity so that you control how your finances will be managed and who will be in control of your assets. You designate the person you want to manage your assets as well as direct how those assets will be managed during your incapacitation. If the court appoints someone to manage your assets, the court will retain jurisdiction over the matter and may require the person to submit periodic reports to the court for review. You can avoid this by creating a trust.
If you are in business, you may be worried about your personal assets being attacked by business creditors. By transferring title of your personal assets to a trust, it is possible to protect your assets from creditors. Your assets become property of the trust. Your creditors cannot attach liens to property that is not titled in your name. However, you must be very careful to structure this to avoid challenges by creditors trying to break the agreement to get to the assets. Having a lawyer is essential when creating a trust to protect assets.
Providing for Minor Children
Leaving assets to minor children can create many problems. The court will not allow minor children to manage assets or money that is bequeathed to them in a will. A person must be appointed to manage the child’s inheritance until that child reaches the age of 18. The person appointed to oversee the child’s inheritance will be required to submit reports to the court for approval. You can avoid this process by establishing a trust for your child that is outside of your will. A trust in a will is subject to probate court supervision; however, a separate trust will continue to operate after your death provided the trust is structured correctly.
Experienced Ohio Trust Attorneys
The attorneys at Lovett & House CO., LPA have years of experience assisting individuals with developing plans to manage their assets during their life, in times of incapacity, and after their death. There are numerous types of trusts that you can utilize depending on your goals and needs. Contact our office to schedule an appointment with one of our trust attorneys to discuss how a trust can work for your benefit and the benefit of your loved ones.