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End of Life Management Workshop #7:

Forming a Trust 101
©2013 Passare Inc. All Rights Reserved
The best way to find out if you
can trust somebody is to trust
them.
Ernest Hemingway

©2013 Passare Inc. All Rights Reser...
What is a Trust?
• A trust agreement is simply your written
instructions directing someone (the
trustee) on how to manage ...
What is the Purpose of a Trust?
A trust commonly solves two issues that
arise in estate planning:
• Avoiding probate and
•...
Types of Trusts
Trusts can be categorized in several
different ways:
• Living versus testamentary
• Revocable versus irrev...
Comparing Trust Types
Living Trust
• It can be created by a person during his or
her lifetime
• It may be used to implemen...
Comparing Trust Types
Testamentary Trust
• It can be created after death through
provisions in a decedent’s last Will and
...
Comparing Trust Types
Revocable Trust
• It can be modified or even completely
revoked by the person creating the
document....
Comparing Trust Types
Irrevocable Trust
• It cannot be changed after it is created.
• Since it cannot be changed, it is cr...
Funded verses Unfunded Trusts
Funded Trust
• A funded trust has assets beyond than the nominal
$1.00 titled in the name of...
Funded verses Unfunded Trusts
Unfunded Trust
• An unfunded trust is a trust with some
nominal property typically $1.00 as ...
Self-Trusteed verses Third-Party Trusteed Trusts
Self-Trusteed Trust
• A self-trusteed trust is a trust with the settlor a...
Self-Trusteed verses Third-Party Trusteed Trusts
Third-Party Trusteed Trust

• A third-party trusteed trust is a one that ...
How Trusts Work
• Trusts are governed by the directions set
forth in the trust agreement
• The settlor (creator) of the tr...
Summary of Trust Benefits
Trusts can be categorized in several
different ways, including:
• Living verses testamentary,
• ...
There’s MORE!
1.
2.
3.

See an Example of an Living Trust
Get a Full Living Trust Checklist
Glossary of Trust Terms

Downl...
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End-of-Life Management Workshop #7: Forming a Trust 101

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Passare and Robert Shepard Professional Law Corporation teamed up to provide you with an introduction to trusts and to answer your questions. Our goal is to help you learn about trusts and help you determine what level of planning and trust is best for the current stage in your life. Does the word “estate” conjure up images of a magnificent property with a tennis court, manicured lawns, and a swimming pool? Many people make the mistake of believing that unless they own property like Rockefeller, they don’t need to plan their estate. While the government dictates what happens to your estate, a compelling question remains: do you want to be the one to determine how your estate and its assets will be distributed? A common element of a basic estate plan includes a trust agreement. If you own real estate, or your beneficiaries are minors, then a trust is an important tool to consider.

Read more: http://blog.passare.com/2013/11/19/end-of-life-management-ebook-7-forming-a-trust-101/ | Passare.com Blog

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End-of-Life Management Workshop #7: Forming a Trust 101

  1. 1. End of Life Management Workshop #7: Forming a Trust 101 ©2013 Passare Inc. All Rights Reserved
  2. 2. The best way to find out if you can trust somebody is to trust them. Ernest Hemingway ©2013 Passare Inc. All Rights Reserved
  3. 3. What is a Trust? • A trust agreement is simply your written instructions directing someone (the trustee) on how to manage your property (the corpus) for the benefit of your heirs (the beneficiaries). ©2013 Passare Inc. All Rights Reserved
  4. 4. What is the Purpose of a Trust? A trust commonly solves two issues that arise in estate planning: • Avoiding probate and • Leaving assets to minors ©2013 Passare Inc. All Rights Reserved
  5. 5. Types of Trusts Trusts can be categorized in several different ways: • Living versus testamentary • Revocable versus irrevocable • Funded versus unfunded • Self-trusteed versus third-party trusteed ©2013 Passare Inc. All Rights Reserved
  6. 6. Comparing Trust Types Living Trust • It can be created by a person during his or her lifetime • It may be used to implement estate tax planning techniques that shelter assets from the federal estate tax with a credit shelter trust ©2013 Passare Inc. All Rights Reserved
  7. 7. Comparing Trust Types Testamentary Trust • It can be created after death through provisions in a decedent’s last Will and Testament • It may be used to implement estate tax planning techniques that shelter assets from the federal estate tax with a credit shelter trust ©2013 Passare Inc. All Rights Reserved
  8. 8. Comparing Trust Types Revocable Trust • It can be modified or even completely revoked by the person creating the document. • It is a flexible tool for estate planning because the settlor can change the terms of the revocable trust to meet the needs of the evolving family. • A common advantage is that the assets in the trust avoid probate, while the settlor retains control over the property. ©2013 Passare Inc. All Rights Reserved
  9. 9. Comparing Trust Types Irrevocable Trust • It cannot be changed after it is created. • Since it cannot be changed, it is critical that the language • of the trust does what you want it to do before it is signed • and funded. • Normally, the creation and funding of an irrevocable trust • is a taxable event. • Irrevocable trusts are used to remove assets from a • settlor’s estate through transfers of insurance or other • property for the beneficiaries, who are usually younger generation family members. • In some circumstances, an irrevocable trust may also be used to insulate assets from creditor liability. ©2013 Passare Inc. All Rights Reserved
  10. 10. Funded verses Unfunded Trusts Funded Trust • A funded trust has assets beyond than the nominal $1.00 titled in the name of the trust. • Revocable trusts can be funded with assets any time. • There are varying reasons to fund a trust during life, rather than waiting to fund the trust through provisions in your will. • For example, an individual may fund a trust if they want the trustee to manage the assets placed into the trust. • Self-trusteed trusts are funded if the settlor (who is also the trustee) wants to avoid the probate process to transfer those assets at the death of the settlor ©2013 Passare Inc. All Rights Reserved
  11. 11. Funded verses Unfunded Trusts Unfunded Trust • An unfunded trust is a trust with some nominal property typically $1.00 as its assets; since some type sort of corpus is typically required to have a valid trust. • Unfunded trusts become funded when a decedent dies and the property passes to the trust through the will. • The property that is ultimately transferred into the trust must first pass through the probate process to get into the trust. ©2013 Passare Inc. All Rights Reserved
  12. 12. Self-Trusteed verses Third-Party Trusteed Trusts Self-Trusteed Trust • A self-trusteed trust is a trust with the settlor also serving as the initial trustee • This permits a person to create a trust and fund it wit assets, while not having to give up control over those assets. • A self-trusteed trust document typically provides that upon the death, resignation, or incapacity of the settlor / initial trustee, a successor trustee takes over • Self-trusteed trusts are funded if the settlor (who is also the trustee) wants to avoid the probate process to transfer those assets at the death of the settlor ©2013 Passare Inc. All Rights Reserved
  13. 13. Self-Trusteed verses Third-Party Trusteed Trusts Third-Party Trusteed Trust • A third-party trusteed trust is a one that is created with someone other than the settlor, such as another individual, or, a corporate entity, such as a bank trust department, as the trustee. • This independent, third-party trustee is charged with the fiduciary responsibility of managing the trust for the benefit of the beneficiaries ©2013 Passare Inc. All Rights Reserved
  14. 14. How Trusts Work • Trusts are governed by the directions set forth in the trust agreement • The settlor (creator) of the trust, provides the rules that the trustee will follow. • The settlor creates the trust by signing a valid trust agreement, and then adding minimal amount of assets into the trust corpus. ©2013 Passare Inc. All Rights Reserved
  15. 15. Summary of Trust Benefits Trusts can be categorized in several different ways, including: • Living verses testamentary, • Revocable verses irrevocable, • Funded verses unfunded, and • Self-trusteed verses third-party trusteed trusts. ©2013 Passare Inc. All Rights Reserved
  16. 16. There’s MORE! 1. 2. 3. See an Example of an Living Trust Get a Full Living Trust Checklist Glossary of Trust Terms Download Our FREE Estate Plan – The Basics - eBook Get Your FREE eBook Sources: http://www.shepardestateplanning.com http://www.ycollaborative.com/blog/ http://www.frenchfunerals.com http://www.passare.com ©2013 Passare Inc. All Rights Reserved

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