WHAT IS THE PURPOSE OF A TRUST AGREEMENT? A trust agreement is a document that allows you (the trustor) to legally transfer the ownership of specific assets to another person (trustee) to be held for the trustor’s beneficiaries. While this may seem odd, it’s done for a number of reasons: to promote wealth management, gain tax advantages (some trusts are not subject to estate tax), keep the document out of public record when you pass away, possibly to protect your estate from creditors and let your loved ones avoid probate after you pass.
The trust agreement is typically a lengthy document that outlines all of the terms of the agreement such as: Assets controlled in the trust Powers and limitations for the trustee Compensation for the trustee How the beneficiaries shares will be distributed to them (outright or in further trust) Terms for termination of the trust The trustee has fiduciary responsibilities to manage the assets in the trustor’s best interests – both while you are living and after you are gone. Their specific roles will be outlined in the trust. These may include managing/selling/buying property, investing, paying bills, filing taxes, record-keeping, distributing assets and more. Because this is a big job that could seriously impact your livelihood, it is extremely important to choose a trustee that you believe will be honest and competent in the role. Even though the trustee is not the actual owner of your assets, that person will need to manage the assets of the trust for the best interests of the trust and its beneficiaries. While communication between the trustee, trustor and beneficiaries may not be a specific requirement, it is recommended that this also be outlined in the trust agreement to keep tabs on the trustee’s power.
This entire process can become more complicated depending on the type of trust that is created (revocable or irrevocable, for example). Because there are so many moving parts in a trust agreement, hiring an experienced trust attorney in Estofa Law can help you understand your options and create the right type of document for your unique situation.
The trust agreement lawyers at Estofa Law can help you understand all of these matters, help you draft documents and can guide you the process,