A trust is an entity recognized by Utah law to hold and manage assets. The assets of a trust are managed in accordance with the written terms of the trust, which can decide who receives assets from the trust and the timing of distributions. The person managing the trust is called a trustee. The position of a trustee is a voluntary position (whether paid or unpaid), so it is important to ensure that designated trustee is willing to serve in that capacity. The person creating the trust is called the settlor, grantor, or donor. Intended recipients of trust funds are referred to as either beneficiaries, grantees, or donees.
Trusts can either be created during the life of the settlor or even upon the death of the settlor. A trust created during the lifetime of the settlor is referred to as an inter vivos trust. Trusts created upon the death of the settlor are referred to as a testamentary trust. Inter vivos trusts may consist of either revocabletrusts or irrevocable trusts. Revocable trusts are trusts where the settlor can have a change of mind and remove assets from the trust at will. Irrevocable trusts simply mean that once the settlor has transferred assets to such a trust, those assets cannot be removed from the trust except as set forth in the trust document.
Trusts can be very simple or very complex. In the estate planning field, there are many types of trusts used.
There are multiple benefits that trusts can offer as opposed to other estate planning tools. These benefits include:
1. Privacy — keeping your assets and the distribution thereof out of the public record.
2. Avoiding or minimizing taxes on some estates and benefit from tax planning.
3. Avoiding probate and contests to the will.
4. Providing for temporary or permanent incapacity in a desired manner.
5. Facilitating the transfer of real estate (real property) in another state.
6. Safeguarding trust assets from creditors and lawsuits.
9. Avoiding interruption of investments and investment strategies.
10. Controlling the future of any businesses.
11. Providing for extreme flexibility in managing assets.
A trust may not be needed by everyone. Those who would likely not benefit from a trust are those with small estates and where heirs are likely not to fight over the assets. In that case, the cost of probate may be less than the cost of a preparing a trust (although Court Costs just seem to be skyrocketing). Keep in mind that life insurance can become part of the estate. If you have a lot of life insurance, your estate could be larger than you had anticipated. Trusts can be used for almost anyone, however, they simply may be more horsepower than you need your engine to have. Nevertheless, it is nice to have the horsepower when and if you need it.