In my world, a “family trust” normally refers to a joint tenancy revocable trust (think husband and wife) as grantors (settlors), trustees and beneficiaries (trustee and beneficiary during life times).
When just one individual is involved it's normally called living trust, revocable trust, grantor trust, etc.
FYI- the initial trustee is almost always (99.99%) the grantor/settlor of that trust. The professional fiduciaries normally only enter the picture after death and if no competent kid, uncle, etc is around.
Benefits of a Family Trust
Among the numerous advantages of a family trust are:
- Avoidance of the probate process. If the grantor dies, the estate can avoid probate court, a substantial benefit over a simple will, where probate is commonplace for any assets not specifically enumerated.
- Avoidance of legal challenges of asset dispersal. A family trust is essentially air tight legally, another potential advantage over a simple will.
- Limitation of exposure to estate taxes, as part of a proper estate planning process.
- Simplicity and Flexibility. A family trust is a relatively easy document to prepare and account for, particularly with the help of an estate planning attorney. Transferring asset ownership to the trust is an easy task. The ability to amend and adjust the terms at any time makes it a very versatile vehicle.
- Control. The terms of the trust dictate exactly what will be done with your assets in the event you are incapacitated or deceased. The trustee must carry out your instructions to the letter, or face civil suits and possibly criminal prosecution.
The Bottom Line – What a Family Trust Does
A family trust is a relatively simple and inexpensive, but potentially powerful legal vehicle, with many benefits for a wide swath of individuals. The family trust essentially makes certain that your assets will be allocated as you wish, should something happen to you and makes certain that the beneficiaries that you designate will have access to their inheritance—in the manner you intend—quickly and fully. The peace of mind in that fact alone may be enough to recommend the process.
I hired a local attorney to draft our will and testamentary trust, but their are online options that are cheaper. One example is Rocket Lawyer. If you haven't setup a will yet or interested in a , give them a try.
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