Santa Clara County Attorney for Trusts
Napolitano Law Offices: Helping You Manage & Protect Your Assets
Trusts can be excellent vehicles for managing assets in a structured way
to meet your goals without the hassle of creating a formal entity. So,
if you are not ready to create a formal business entity, creating a trust
is a great way to get started to manage and protect your assets. Our Santa
Clara County trust formation lawyer at Napolitano Law Offices offers strategic
counsel and assistance, focusing on the “big picture” and
giving you the legal tools you need to leave confidently!
What Is A Trust?
A trust is a fiduciary arrangement that allows a third party, or trustee,
to hold and manage assets on behalf of a beneficiary or group of beneficiaries.
The trust itself is then basically an agreement document that spells out
the rules you want followed for the property and assets in the trust.
- Therefore, in plain language, there are three parties involved in a trust:
Trustee: The person as described above who has the legal right to hold and / or
manage the assets in the trust. The trustee has the legal obligation to
act in the best interests of you or your business, at all times. The trustee
must not profit from his position as trustee.
Settlor: The person who creates and funds the trust. This is you, or your business.
Beneficiaries: The recipients of the benefit or property in the trust.
Benefits of a Trust
Trusts can be arranged in many ways and can specify exactly how and when
the assets pass to the beneficiaries. Some common benefits of a trust
are reduction of estate tax liability, protection of property in your
estate, and the ability to avoid probate. Additional benefits can include
quicker access to assets by the beneficiaries through avoidance of probate.
Additionally, if it is an irrevocable trust, it may not be considered
part of the taxable estate, so fewer taxes may be due upon your death.
- Other benefits of trusts include:
Better control of your wealth – You can specify the terms of a trust precisely, controlling when
and to whom distributions may be made. You may also, for example, set
up a revocable trust so that the trust assets remain accessible to you
during your lifetime while designating to whom the remaining assets will
pass thereafter, even when there are complex situations such as children
from more than one marriage.
Protection of your legacy – A properly constructed trust can help protect your estate from
your heirs’ creditors or from beneficiaries who may not be adept
at money management.
Privacy – This is a huge benefit of a trust—perhaps the most important,
other than avoidance of estate taxes. Since probate is a matter of public
record, a trust may allow assets to pass outside of probate and remain
private, in addition to possibly reducing the amount lost to court fees
and taxes in the process.
Greater protection against challenges – Sometimes, people are unhappy with the distribution of assets,
and decide to challenge it. A trust offers much better protection against
challenges than does. Challenging a trust is not impossible, but it is
much more difficult. And since a trust avoids probate it also avoids the
public disclosure of the asset distribution.
Flexibility and control – While different types of trusts offer varying amounts of control
over the money and property you place in the trust, trusts are incredibly
flexible vehicles for choosing what happens to the property placed into
it and how it is paid out. Some trusts even allow the settlor to receive
an annuity of trust assets while the remainder is held for beneficiaries
at some later date.
Ease in dividing of assets and property – If there are assets that are difficult to divide among beneficiaries—such
a house, boat, or car—a living trust, for example, can be used to
spell out how such property should be transferred upon death. The trust
can detail who inherits the property, as well as who has the right to
use it and under what conditions, whether the property can be sold, how
the proceeds should be divided, if the inheritors can buy each other out,
and so on.
Elimination of family feuds – In a trust, it can be detailed exactly which person obtains a
particular asset. This eliminates arguments over certain assets because
there is a claim that it means more to a certain individual or has more
sentimental value to that person. In addition, unlike a will, a beneficiary’s
spouse cannot override and gain access to an item specifically mentioned
and left to someone else in the trust.
Protection of beneficiaries from debt collectors – Trustees can be instructed through trust documents to ensure that
specific conditions are met before distributing funds. Whether you want
a certain amount earmarked for your child to buy his or her first home,
or for your alma mater to build that new wing, a trust allows personalized
control and the potential for better oversight over the property placed into it.
Call Napolitano Law Office to Receive a Free Consultation
There are many different kinds of trusts. Irrevocable trusts—which
are trusts where you cannot change your mind about asset distribution
and other factors—can potentially offer protection of personal assets
from lawsuits. However, the law is complex in this area and irrevocable
trusts have many pros and cons. Our
Santa Clara County estate planning lawyer is here to provide counsel
for individuals and
Call us at (650) 399-9545 for a free consult. We are always happy to
answer your questions.