A trust is a legal arrangement through which a designated person, known as the trustee, holds legal ownership of certain assets in trust for another person, who is the beneficiary of the trust. Individuals often use trusts as a way for their children or grandchildren to receive their inheritance in a way that helps avoid significant taxes and lengthy, expensive probate proceedings. A trust is also a way to place conditions on the beneficiaries who will receive the trust funds, such as keeping the funds in trust until a beneficiary reaches a certain age.
Responsibilities of a Trustee
Being named as the trustee of a trust is a big responsibility that you should take very seriously. A trustee has a fiduciary relationship with the beneficiaries of the trust. This means that the trustee has a duty to maintain the value of the trust assets for the beneficiaries, in terms of ensuring that the funds are invested appropriately. In other words, the trustee has a duty to refrain from taking big risks with the trust assets or causing them to lose significant value. For trusts containing assets of significant value, an individual establishing a trust may choose the trust department of a major bank or financial institution to act as trustee for the trust.
Status of Beneficiaries
Beneficiaries can be current or future beneficiaries, depending the terms of the trust. For instance, the trust document might provide that the owner of the assets placed in the trust is entitled to any income that the trust funds generate during his or her lifetime. This is an example of a current beneficiary, i.e., the original owner of the trust assets. On the other hand, a future beneficiary is a person who will receive the assets or income from the assets at a certain point in the future, which usually comes after the settlor, or the person who has created and funded the trust, has passed away.
In order for a trust to be truly effective, the settlor must ensure that the trust is properly funded. Property such as real estate and bank accounts must be titled in the name of the trust, not the name of the original owner of the property. If a settlor fails to transfer property or funds into the trust, and then unexpectedly passes away, the trust may be useless, as the remaining property potentially would have to go through probate.
Contact Your DuPage County Trust Attorneys Today
Momkus LLC Roberts prides itself on providing our clients with a full range of estate planning and probate services that are essential for anyone who wishes to adequately prepare for the future. We will work with you to gather all of the information relevant to your situation, answer any questions that you may have, and attempt to address your concerns throughout the legal process. Contact our office today and set up a consultation with one of our skilled DuPage County wills and trusts attorneys, and learn how we can help.