Philip M Hawes, Esq

Philip M Hawes
Attorney & Counselor

The process: planning, tools and technique . . . .

Thoughts on Making Your Trust

The Role of your Trust. Living trusts are the centerpiece of many estate plans for many reasons: they provide for continuity in the management of your finances, they may be administered economically, they are not often subject to public scrutiny, and they will adapt to your changing circumstances because they are changeable (“living”) documents. The role of your other plan documents is to “fill in” situations where the trust does not operate, such as giving an agent the authority to make personal care decisions for you or file your tax returns (special durable power of attorney) when you are incapacitated, or direct assets to your trust that you may have forgotten to transfer or property received at or after your death (pour-over will).

The Elements of a Trust. What is a trust? In the most basic terms, a trust is an agreement, usually written, between you and whoever is serving as trustee in which you provide various instructions for the management of the assets you put under your trustee’s control.

I call it an agreement because the person serving as trustee must affirmatively accept or “sign off” on the trust document itself.

In order to appreciate what a trust is and can do for you, it may be more beneficial to see its components in context. You will find that the separate components of your trust are integrated to serve a unified purpose so that your “agreement” will operate as intended.
Please refer to the trust overview articles linked in the sidebar on the right.

The components that make up a trust are the topics that you and your attorney will examine and discuss, and they ultimately will become the components of your own trust in a form that is ready to be signed.

Funding your Trust. The final element of a trust is the property that the trustee will use to carry out the terms of the trust. Your trust needs something to manage in order to be a trust. These components are referred to as the “trust estate”.

Therefore, you must somehow transfer assets into your trust. This is called “funding”, which is achieved by changing ownership of the asset into the name of the current Trustee of your trust. The Trustee is the legal owner of the trust estate. Your trust intends and allows the Trustee to act on his or her own, follow your instructions and intentions, and do so in a way that adheres to the fiduciary standards—duties and powers—of a Trustee.

This is what makes trusts work so well: they function with or without your input, they are not interrupted in the event you become incapacitated (your “successor trustee” will take over at that time), and all of the assets you put into the trust will not be subject to the probate process following your death.

More information about funding your trust is contained within the memo linked in the sidebar to the right . . . . . .