Trusts & trust administration
A trust is an arrangement in which one person, the trustee, manages property for the benefit of others under written instructions. Trusts can give you more control over timing and conditions than a will alone, and they can be a good fit when a family's situation is more than straightforward.
How a trust works
Three roles appear in nearly every trust. The person who creates it sets the terms. The trustee manages the property and follows those terms. The beneficiaries receive the benefit.
A revocable trust can generally be changed while its creator is living. An irrevocable trust is harder to change and is used for particular goals. Which one fits depends on what you are trying to accomplish.
Why families use trusts
- Setting terms for when and how beneficiaries receive property, instead of all at once
- Planning for a spouse while preserving property for children from a prior relationship
- Providing for a beneficiary with special needs without disrupting other support
- Naming someone to manage affairs if you become unable to
- Keeping the details of your plan more private than a court filing would
- Reducing the role of the court in administering property placed in the trust
Funding matters
A trust only controls property that has been properly transferred into it. Signing the document is the first step, not the last. Retitling accounts and real estate, and checking beneficiary designations, are what make the plan work.
A trust that was never funded can leave families with the delay and expense they were trying to avoid. Ask how funding and beneficiary designations will be addressed when discussing a trust plan.
Choosing a trustee
The trustee carries out your plan for years, sometimes decades. Consider:
- Whether the person is organized, fair and comfortable with financial decisions
- Whether a family member, a professional or a combination makes sense
- Who would step in if the first choice cannot serve
- How the trustee will communicate with beneficiaries
Trust administration
When the person who created a trust dies, or when a trust becomes irrevocable, the trustee takes on a set of duties. These generally include identifying trust property, keeping accurate records, communicating with beneficiaries, paying expenses and making distributions according to the document.
Trustees owe legal duties to the beneficiaries, so understanding the terms before acting is important. We help trustees work through those duties step by step.
How to prepare
- Define your goals: who you want to benefit, and what you want to protect
- Prepare an overview of assets, including real estate, accounts and business interests
- Gather any existing wills, trusts, deeds and beneficiary forms
- Think about who could serve as trustee and successor trustee
- If you are a trustee already, bring the trust document and recent account statements
Common questions
Does a trust replace a will?
Often a trust is paired with a will that covers anything not placed in the trust. We can explain how they work together for your situation.
Is a trust only for wealthy families?
No. Trusts are used for many reasons, including family dynamics and long-term care of beneficiaries. Whether one is worth the effort depends on your goals.
Can a trust avoid taxes?
Some trusts are used in tax planning, but a trust is not automatically a tax solution. Tax effects depend on the type of trust and your circumstances.
What is the difference between a revocable and an irrevocable trust?
A revocable trust generally allows its creator to change or revoke it while able to do so. An irrevocable trust restricts that flexibility. Each has different ownership, tax and administration consequences that should be understood before property is transferred.
Does having a trust mean probate will never be needed?
Not necessarily. Assets properly held in a trust can generally be administered without probate, but property left outside the trust may still require it. Funding the trust and coordinating other transfer arrangements are essential parts of the plan.
Do I need to update my trust when I acquire new property?
Review how new accounts, real estate and other assets are titled and whether they should be connected to the trust. An existing trust does not automatically receive every asset you acquire. Periodic funding reviews help keep the plan aligned.
Can I be the trustee of my own trust?
Often, the creator of a revocable living trust also serves as its initial trustee. Naming a successor helps provide continuity if you die or become unable to manage the property. Other trust types may require a different arrangement.
What if the person I name as trustee cannot serve?
The trust should explain how a successor is selected. Naming backup trustees and discussing the role with them can reduce uncertainty. If no named person can serve, the document and applicable law determine the next steps.
What records should a trustee keep?
Keep the trust document, asset records, statements, receipts, tax records and a clear history of distributions. Beneficiaries may be entitled to information or accountings under the trust and applicable law. Separate trust finances from personal finances.
Should retirement accounts be transferred into my trust?
Do not retitle a retirement account into a trust without specific advice; doing so can create serious tax consequences. Naming a trust as beneficiary is a different decision with its own rules. Coordinate those choices with your estate plan and tax advisor.
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Contact the practiceThis page offers general information, not legal advice for your situation. Laws change and individual facts matter.
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