What is a trust?
- There is a common definition of “trust” and a legal definition of “trust,” and both definitions involve a relationship between one person and another.
- In the non-legal sense, “trust” is a belief that another is reliable, dependable, truthful, good, etc., or a combination of these.
- In the law, a trust is a relationship between three people (who can be the same three people and may include an entity) – trustor, trustee, and beneficiary – in which the trustor gives property to a trustee to hold for the benefit of a beneficiary.
- In the legal sense a “trust” is not actually a document, although a trust can be formed by a document.
Is a trust and an estate plan the same?
No. An estate plan includes a trust and other documents that cover “an estate.” An estate is your property or your legal interest in property. An estate plan typically includes a trust/will (usually both), power of attorney documents, and nominations for guardian, conservator, and agent for health care.
What is a will?
- A will, or “Last Will and Testament,” is a document that states how a person wishes their property to be divided upon their death. In use for centuries, a will is mistakenly thought of today as the only way to distribute property at death. In fact, a will is seldom used alone to divide up property at death.
- Part of a comprehensive estate plan, a will works with a trust to distribute property at death to the trustee, who then distributes all property according to the trust.
- A will can also determine disposition of remains at death in addition to property divisions.
- The person creating a will is called a “testator” and the person in charge of managing the testator’s estate/remains is called an “executor/executrix.”
- A will can form a trust (but a trust cannot form a will).
- A will was created according to a very old law called the Statute of Wills, dating back to 1540 in England. Today, the rules are generally the same, but there are exceptions. In California there are two ways to make a will, and both require a document.
- One way is that the testator, who understands the document is a will, signs the will and the signing is witnessed by two people who are present at the signing, or two people whom the testator acknowledges that the signature on the will is his/hers.
- The other way to form a will, and there is a great video on the subject on our website, is to handwrite a document. All terms of the document must be handwritten (with few exceptions that are not important). The document should state, “This is my will.” The will should state who is to receive the property. Finally, the will should be signed and dated by the testator. No witnesses are required. However, there is a LOT of risk in creating your own will and you should consult with us first beforehand.
Are trusts for people with lots of money?
- No. People think a trust is for people with lots of money because of the term “trust fund,” or “trust fund baby,” or similar term. And while those terms (often negative) may suggest that a lot of money is in a trust, any property or property interest can be held in a trust.
- A trust can hold virtually any property, including NFTs, digital content, cars, clothing, and animals, for example.
- A trust is a great way to help someone who really needs financial help as soon as you pass because the alternative to a trust is time consuming and expensive.
Why do I need a trust? How do I know if I need a trust?
- There are plenty of reasons to get a trust. Listed below are a few.
- You need a trust if you want: 1) your property to go to someone when you die; 2) your instructions kept private; 3) to avoid the default rules for how your property is distributed when you die; 4) other terms that a will alone cannot provide; 5) you want most of your things distributed quickly.
How can I create a trust?
- To form a trust, you need the intent to form a trust (usually supported by evidence), trust property, a trustee who holds the trust property, and a trust beneficiary. In California, these are the only requirements. In fact, a trust can be formed without a document! Note: the purpose of creating a trust must be valid (legal).
- Sometimes a trust is created even when the person making a trust isn’t aware that their actions indeed create a trust.
- In one of our cases, a man gave his wallet to his girlfriend as he was admitted to the hospital, telling her to use his debit card to pay for his prescriptions/medical services and that she may keep the balance in his account. Witnesses stated that he intended to leave everything he had to his girlfriend.
- The man demonstrated intent to benefit his girlfriend at his death by telling others of his plan to benefit her. He supported his intent by physically giving her his debit card and pin with instructions to keep everything after she paid for his medical expenses. This made the girlfriend his trustee and beneficiary!
Do I need a lawyer to make a trust?
- No, but you should. We have seen poorly drafted trusts with results that the trustor either didn’t think about or didn’t appreciate. These results can have disastrous consequences.
Are estate planning attorneys expensive?
- With flat rates, packages, and low-cost options, our firm has a range of services to fit your needs.
- We always offer a free consultation.
- Attorney services can get expensive if you use the wrong firm or online service. We’re experienced and we help you and your family avoid higher costs later.
Estate Planning Attorney
Eddie was on the path to becoming a prosecutor, winning felony trials, but decided to help clients directly. With a large family and talent for getting to know people, estate planning is the perfect fit.