Watch Your Language: Trust

Do you need a trust? Well, it depends.

One of the most common questions I hear during our Mutual Interviews is, “Do I need a trust?” And the typical lawyer answer is, “It depends.” In order to answer that question, we need to start by defining what a trust actually is.

I’ve heard a trust described as a form of divided ownership – where one person owns an asset but only for the benefit of another person – and that’s a pretty good description.

A trust is an agreement between the person who creates the trust (the grantor) and the person who oversees the trust property (the trustee). This agreement is created all for the benefit of another person.

As you can see from this diagram, the grantor-trustee relationship is a two-way street while the relationships between the grantor and the beneficiary and between the trustee and the beneficiary only go one way.

The terms of a trust are written down in a trust agreement, normally, and the form of that agreement determines what kind of trust it is: testamentary or inter vivos/living. But, sometimes a trust is created unintentionally through an oral agreement.

Once you’ve figured out whether a trust is a testamentary or living trust, then you can narrow down the type even further. There are dozens – maybe even hundreds – of kinds of trusts: special needs, supplemental needs, income-only, spendthrift, asset protection, Medicaid, Veteran, pooled, Miller – the list goes on and on. The type of trust that works best for you – and even whether or not you need a trust in the first place – will depend on your specific circumstances.

You’re in luck! Trusts are a big part of what we do at Huizenga Law. To learn how a trust could fit within your estate or nursing home plan, schedule a Mutual Interview with us at (712) 737-3885 today!