What, you may ask, is a Trust?  

A Trust is a legal relationship between three parties, the:

  • Grantor.  The creator of the Trust, sometimes called the Trustor, Settlor, or trust maker;
  • Trustee.  The one who holds Trust property and agrees to follow the Grantor’s instructions; and
  • Beneficiary.  The ones for whom the Trust is created in the first place.

Most of the time, as our client you would begin as all three parties to the Trust. You create it and write the rule book (the trust agreement) that governs the trust. You are the initial Trustee, so you are in charge of enforcing your own rules, and you are the initial Beneficiary, the real “owner” of the trust, as we commonly think of ownership.  The power in creating this relationship on your terms is that, as significant life events happen, the roles and your rules adapt seamlessly to every life event. Life is ordered by your rules, not the government’s rules.

In contrast to traditional Will-based planning, Trusts are different in some extremely significant and powerful ways:

  1. Effective Date.  Your Trust is effective the day you sign it. It can accept and hold property from day one, and that property is then managed under the rules you put into your Trust Agreement.
  2. Protection Against Disability.  Since a Trust holds title to the property it manages, your disability does not cause a loss of continuity in managing your property. Since title isn’t held in your name, your disability doesn’t affect the management of your property. That is still done by your Trustee.  Here is my favorite visual picture of how a trust works – a little red wagon.  If my grandson carries his his action figures, balls, and other toys from my house down the street to play with a neighbor’s child and he falls down, what happens to his property?  It goes everywhere, doesn’t it, and someone needs to come alongside him to pick it up. But, if he puts all of his stuff into the little red wagon he has at our house and starts down the street and falls, what happens to the toys he has in his wagon?  The answer is, nothing at all. There is nothing to pick up. He only needs someone to care for him, clean his scraped knee, and enable him to go on. His property is cared for in his trust – his wagon – whether he can pull the wagon or not.
  3. Privacy.  Your Trust and the property it holds are private. So, when your loved ones eventual inherit the property held in your Trust, they will do so privately, without having to disclose their inheritance to a court.
  4. Governing Rules.  A trust operates under Your Rules. At every stage of life, the ones you appoint to oversee the Trust (as trustees) will be in charge. Not because a judge approved of your trust or your successor trustees, but because you chose them.
  5. Cost. By avoiding the probate system, your estate will save the cost of probating your Will (a savings of $5,000 or more) and the cost of managing property during your lifetime in a guardianship (a savings of $25,000 or more).  There is no need to probate a Will, because you have transferred property to your Trust during your lifetime, effectively settling your estate yourself.  Very little is left to do at your death, and what is left to do (pay medical bills, stop recurring payments, etc.) are done privately, by the person you chose to take that responsibility. No delay, and a fraction of the cost of a probate proceeding.

For more information about Will-based planning, or to determine if a Will or Trust is best for your family, call us at 817.500.0155 or Book Time with Joe to receive your Estate Planning Assessment.

The video below may also help you understand the differences between modern Trust Planning and traditional Will Planning.

Will or Trust? You Decide