Stautz Law

Tag: Revocable Trust

  • Does a Revocable Trust Protect You from Creditors?

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    Hi folks, it’s Andy Stautz at Stautz Law. I’m here for a quick chat today about revocable trusts and creditor protection.  

    Creditor Protection as an Estate Planning Concern

    Oftentimes we’ve got clients who have business interests, right? They run a business or they own, you know, some sort of some sort of partnership interest, LLC membership, that sort of thing. And when we’re doing estate planning for those clients, the question is OK, you know, can the estate planning accomplish any creditor protection?  

    Especially if it’s a high risk business: [e.g.] logistics, medicine. Pretty much every business has its own risk. But the question is, OK, let’s say we’re doing a trust based plan, a revocable trust plan. That works well for a lot of reasons, and one of those reasons is that the settlor, (the person who makes the revocable trust) has–the way I write them–retains a ton of control to revoke, amend, you know, distribute trust assets.  

    Revocable Trusts and Creditors

    Key Concept: You Control the Living Trust so Your Creditors Treat it as Yours

    So that’s great from an estate planning side of things, but what it means is you don’t get any creditor shield from the Revocable Trust itself. Right? Because if you make the revocable trust and you grant yourself all the powers to control what’s in it, it’s still your property. I mean, it’s not [your property] to a probate court, but in the real world it is. It is!  

    You can still do what you want with it. And so that’s what happens… if there’s a judgment against you, creditors can reach assets in a revocable trust because the law says, yeah, it’s basically yours.

    Retained Control in Other Contexts

    And that’s how the tax law treats it too, right? You can’t use a revocable trust to move assets out of your taxable estate because yeah, the IRS takes a look and says, well, you still control it. Still yours.  

    So the pithy take away is a revocable trust has no creditor protection benefits. It doesn’t.  

    The pithy take away is a revocable trust has no creditor protection benefits.  

    Other Ways to Get Creditor Protection

    You know, there are great reasons to do a revocable trust still– it’s just creditor protection is not one of them. So you need to accomplish creditor protection in other ways. You know insurance is a big one. Business entity structure. You know, in LLCs, limited liability. So that’s the way to protect yourself. 

     But the the trust isn’t going to do. 

    (Obviously a Will won’t [get you creditor protection] because a Will, you know, isn’t a transfer of property at all.) 

    So with those things in mind, you know that’s it’s just two separate things you need to think about 

    Irrevocable Trusts DO Protect You from Creditors . . . at a Cost

    If you do want a trust with creditor protection characteristics, you’re looking at an irrevocable trust. Basically. I mean, big topic. There are exceptions.  

    But for a lot of people, that’s not an appropriate choice, because then you are like… to get the creditor protection, you need to actually give away the property. So that’s kind of the tension there.  

    Anyway, you need specific advice based on your risk profile. You know, the nature of your interest, what your goals are, but in general creditor protection issues are going to be part of a holistic plan, probably going to involve your financial advisor. If you’ve got one, your insurance broker, if you’ve got one.  

    And it’s not going to happen in a will or a revocable trust based plan. So those are some things to think about. Call me if you want to talk about your situation. I love talking about these things. You’re on my website, so there’s information everywhere. Hope to hear from you soon. Bye now.

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  • Testamentary vs. Inter Vivos Trusts

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    Hi folks, it’s Andy Stautz at Stautz Law. Today we’re talking about another estate planning topic and that is the difference between testamentary trusts and inter vivos trusts. I’m kind of interested in testamentary trusts because I I think they’re underused. So let’s let’s talk about the difference.  

    This is the terminology, and then in a future video, we’ll talk about how to use them.  

    Why is it called a Testamentary Trust?

    The basic difference is a testamentary trust is established in your will. Your last will and testament. So “testamentary,” it’s in the testament. These trusts don’t exist until you die. Until the will makes them exist.  

    Why is it called an Inter Vivos Trust?

    Contrast that with an inter vivos trust: inter vivos, you’ll see it written here. INTER. That’s Latin word meaning “between.” Vivos: V-I-V-O-S vivos are living people. Also Latin. I can’t think of any words off the top of my head, but “revival,” right? That “V-i-v,” that means alive.  

    So inter vivos trusts are ones you make between people who are alive. And the most common… probably the most common inter vivos trust is a revocable living trust. That’s the basic probate avoidance trust that you see all the time.  

    What Kind of Trust is a Revocable Trust?

    And you might say, wait a minute. I thought my revocable trust only works after I die. It’s like a will substitute. And the answer is, yeah, you’re right. . . most of the action happens…in a revocable living trust, most of the action happens after death. That’s when you know the trust winds up. The successor trustee has to distribute the assets, you know. 

    But you made it while you were alive. You passed the trust assets while you were alive. So that’s what makes itan inter vivos trust.  

    Now returning to testamentary trusts. Like I said, they’re created in a last will and testament, so you need to have that document, obviously. But otherwise there aren’t really any restraints.  

    Uses and Limits on Testamentary Trusts

    You know, if your will doesn’t have a trust, it might be two, three, four pages. You can put a a great big honking trust in your will. You know, as complicated as you want it to be.  

    I think the most common use is a minor’s trust. So we’ll talk about planning scenarios in the next in the next situation. But you know it could be you’re in a place where it doesn’t make sense to retitle all your assets into a trust and worry about administering a trust. You know, as an emergency backup, maybe you’ve got a testamentary trust so that you don’t accidentally drop a huge inheritance on minor children. Because you know that causes problems both while they’re minors and when they come into the money all of a sudden on reaching majority.  

    So that’s kind of the difference: testamentary, created in your last will and testament; inter vivos, between living people. And we’ll talk more about uses later. 

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  • Saving Money with Revocable Trusts

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    Hi, it’s Andy Stautz at Stautz Law. Today we’re back talking about estate planning. And my topic for today is why estate planning is worth it. In other words, how you can save lots of money with a revocable trust.  

    Is Getting a Trust Done Worth It?

    Now. You know. I think I provide overwhelming value to my clients. I think doing an estate plan is always worth it. UM. Because. The comparison between the upfront cost of doing an estate plan. And the back end savings is huge. And every time.  

    So today we’re just doing a simple example. I’m not going to go into the whole thing. I’m just going to point out that, you know, a will based plan is kind of the the cheapest, most basic option. A step up from that and what I recommend for lots of my clients is a revocable trust based plan.  

    Now. Writing a trust is more difficult. It’s more expensive, and there’s a little bit more administrative complexity. But it saves money in the long run. And the math is really simple.  

    How a Revocable Trust Saves on Probate Costs

    You know, setting up the trust costs a little over $3000. But a trust avoids probate, which a will based plan does not – and which “no planning at all” does not.  

    Estimating Indiana Probate Costs without a Trust

    Well, guess what? Probate administration in Indiana right now pretty much starts at $3000. That’s for a simple, you know, unsupervised, uncontested estate. That’s just how long it takes to get through the court process. 

    And that’s a minimum. So it goes up from there. So if someone comes out of the woodwork and challenges the will; if you’ve got a bunch of creditors that you didn’t know about; You know if, uh, you need it supervised for some reason… You know, all the complexities add up.  

    So. The fees I charge for my trust-based planning are…. intended to demonstrate overwhelming value. It’s going to save you the minimum financial cost of going through probate, not to mention the risk of more expense, the risk of conflict. And you know, the emotional strain of having to deal with lawyers and court while you’re grieving.  

    Is an Indiana Estate Plan Worth the Cost? How to Decide

    I think the comparison’s a no brainer. You know, if you can afford it, paying to have it done upfront is definitely going to save you money. It’s also going to make your life easier. So that’s why your financial planner. You know, advises you to get an estate plan. That’s why I try to get my clients to, like, come on, sit down and do your estate plan. Because it’s just … it’s the responsible thing to do. It’s good for you.  

    And that’s why I love my job because. I really get to help clients out. I get to deliver a product that is, you know, that is great. It’s a great deal. So that’s my point for today. I’m sure we’ll talk about it in the future.  

    You can look around on the website, you can book an appointment online or you can give me a call if you want to talk. And we’ll see what plan is right for you. Thanks and bye.

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  • Video: Estate Planning for Children

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    Hi, it’s Andy Stautz at Stautz Law. I’m back today with another estate planning talk on estate planning for children. Not you know, for children, they can’t do estate planning, but for your children, estate planning around children.  

    And this is in some way a follow up to [my other video talks] “when to revise your estate plan” and “estate planning for young adults” because you know, usually having your first child or having your, you know, successive children is something that’s happening to you, it’s a big life event, you know, as a young adult. And it has estate planning consequences.  

    So Step 1 is: Your children are very important heirs in the eyes of the law. So even if you’re… well… “Even if you’re married”… if you are married, and you have children, you might want every – all your property to go to your spouse, but actually your children are entitled to half of it!  

    That’s convenient when you are older and your children are adults, but it is very inconvenient when you have minor children. So when you’ve got a baby. If something happens to you the very next day. You know, half of your property is not going to your spouse. It’s going to your newborn. And then you’ve got 18 years of property guardianship to deal with. Which is tedious, not to mention expensive.  

    So. The best plan is at at the very, very least have a will to override that intestate share. Right, to make sure that your property goes just to adults and not to minor children.  

    Better still is to have a revocable trust with your spouse, if you have one. You know, joint trusts. Or on your own if not. Because that gives you way more control over how your property passes to your minor children. Or major children. What a revocable trust can do is stage an inheritance over time. It can limit or condition an inheritance on certain life events. Umm. It can keep your children from having to have a guardian in a probate proceeding. All of which are good things for most people.  

    You know, you might have special concerns, but in general it’s useful to most parents to say, OK well, you know, discretionary distributions for college expenses, you know, lump sum at age 25 or half at 25, half at 30, because what you don’t want to do is have minor children responsible for large sums of money, responsible for property when they can’t legally take action about it, and also you probably want to avoid the situation where your child turns 18 and all of a sudden they come into a big inheritance. 

    Because while generational wealth is usually great, it can also ruin lives if it’s given at the wrong time and under the wrong conditions.  

    So just to recap, you know, the possible variations of your your family situation and your children are basically endless. But the two big takeaways are: 1) have some plan in place because the 50% intestate share is really inconvenient. 2) Your plan should probably include a trust if you want to do anything more complicated than just dump money on your children at 18.  

    So that’s the long and short of it. Look at it as a childcare expense. You know, it costs money up front, but it’s a prudent decision to guard against all the crazy things that can happen if you don’t.  

    So again, a topic that requires personal planning, but that gives you kind of an idea of of what to look at. You can book a planning meeting with me online. You can give me a call.  

    Congratulations. If you just had kids, that’s great. Look forward to talking to you soon. Thanks and bye.

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  • Video: Estate Planning after Divorce

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    Hi folks, it’s Andy Stautz at Stautz Law. I’m back today talking about estate planning. Today’s topic is estate planning and divorce. Divorce is a big moment in estate planning because it really changes the legal priority of your relationships, right? Your spouse was number one person in the eyes of the law — your ex-spouse or soon to be ex-spouse, you know, you’re changing those relationships. So during a divorce, immediately after a divorce, you need to revise your estate plan to account for those changes.  

    So the default rules try to handle it, right? because they know you don’t want your ex-spouse being the same person in your plan, in your property disposition, as they were before.  

    But it’s not complete, right? There are some things that happen, like, accidentally that you really need to pay attention to. 

    So. Your ex-spouse, upon divorce, your will provisions in favor of your former spouse are cancelled. I.C. 29-5-1-8. Same thing with revocable trusts, canceled. But not with irrevocable trusts! I.C. 30-4-2-15. And not with life insurance designations or retirement account beneficiary designations. But then transfer on death property deeds, yes, the law does automatically cancel those. I.C. 32-17-14.

    You know if you had an estate plan where your spouse was everything. It’s going to go to pieces after your divorce because some of them will automatically be cancelled, but some of them won’t be. So you should revise that. And make sure, you know, it’s all undone. Everything, everything you want undone is undone.  

    So I’ll try to put those citations you know in the. In the text version of this. But it’s oddball, so you know, you can’t just assume that “Oh, we’re divorced now . . . my ex-spouse doesn’t get any.”  

    The other big point to keep in mind is that the law, the default change in the law, only happens on the date of the dissolution decree or annulment. So while your divorce is pending, you know, you probably don’t want your soon to be ex-spouse, you know, to be in the same position. But the law hasn’t caught up to your family situation yet, so especially if your divorce is going to take a while or you’re worried about, you know, things happening in the interim, you know, revise it in advance. OK.  

    And lastly, even where the law automatically takes care of straightening things out, it’s still good form to, like, go back, restate your will, restate your trust. And take it out. You know, update it. Take out the references to your former spouse as a beneficiary. Note that the marriage existed, but ended in divorce.  

    Is it legally necessary? No, maybe not, but it’s protective of you. It reduces the risk of a conflict later and conflicts are expensive. So you should be revising everything anyway.  

    And lastly, you know, you probably want to rethink your entire scheme of disposition after your divorce, because now instead of being married and jointly responsible for any children or jointly responsible for your parents, your relatives, whatever, it becomes kind of “just you,” in a sense. So maybe it’s time to set up a trust for your children, because you can’t assume that your property is going to your now ex-spouse. So, you know, you might need to use documents in a different way… to sort of stand in for what you used to rely on this other person for.  

    So if you’re getting a divorce, you should think about your estate plan. You should get one if you don’t have one. You should make the revisions. To make sure it works like you want. So that’s quick overview. Your situation is almost certain to be special and different, so that’s why we have initial planning meetings. You can book online. You can call me, and I’d be happy to talk about what you specifically need 

    That’s all for today. Thank you very much and hope to talk to you soon. 

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  • When Should I Revise My Estate Plan?

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    Hi folks, it’s Andy Stautz at Stautz Law. I’m back with another talk on estate planning topics and today’s topic is when to revise your estate plan, or “when should I revise my estate plan?”  

    You know, there’s no expiration date on your estate plan documents. Once you get them. But. Big events in your life should probably affect how you’re planning about your property and and your healthcare decisions also  

    In general, let’s divide this into three  categories. We’ve got family events, we’ve got property events, and we’ve got just time.  

    So. Family events: If you get married, if you get divorced, if you have children, especially for the first time, but also subsequent children. UM. You know your if your parents. If your parents pass. Especially, you know, especially if you’re younger. All of those family events can, can and should prompt you to think about your estate plan again. And that doesn’t necessarily mean making an appointment with your estate planning attorney. It just means think about it: “OK. I just had a kid, you know. Does that mean it’s time to, uh, set up a revocable trust? In case something happens to us during what you know, wow, your son or daughter is under 18.” Yeah, maybe. Right?  

    Marriage for sure. Because your spouse instantly becomes number one in the eyes of the law in terms of your, your property and your healthcare decisions. So. That could be good. That can be bad, but it’s something to think about. Same thing with divorce. (I’m going to make a separate talk about that because it’s its own, you know, it’s complicated enough.) 

    So all of those. Events something big happens in your life. Great. Congratulations. (Probably, or sorry, the case may be.) But you know, when something happens, it’s it’s time to stop, reflect, take stock. You know, hopefully you’re doing that emotionally anyway. But you know you can do it emotionally and also think about it. Think about your legal needs too. UM. You know, I’m a lawyer. Of course I say that. So that’s one category.  

    The other would be property events, so. If something in your. Assets changes big time. That’s probably time to just check up on your estate plan and make sure it’s it’s covered. So buying or selling a house. Uh. Inheriting a big sum of money. Coming into a business interest that you didn’t have before. UM. You know, even things like appreciation of your preexisting assets might be enough. Where you know if you’re young, you don’t have much. You’ve got a basic estate plan. It’s like, OK, well, now that I’ve got, you know, $1,000,000 in my retirement account, Do I need a different plan? And again the answer might be no. But it’s worth, it’s worth thinking about and you know, come in for a planning meeting or a revision meeting. I’m certainly willing to do that for my clients. Other other attorneys are too, I’m sure. So that’s kind of property events.  

    The other is lapse of time. So even if nothing’s happening in your life, you’re just cruising along. Everything’s good. You’re just enjoying your days. You know, every every five years, every 10 years. Yes. Check in because the law might have changed. You might have changed, right? Your priorities in terms of what you’re trying to do.  

    It’s such an uphill battle, I think, to get people to think about estate planning for the first time. Umm. Because it’s tough conversations, it’s tough topics. But once you’ve got the documents, once you’re ready, you’ve got a plan. It doesn’t stop there. Hopefully it’s a little less of an ask, going forward, to revisit them and make sure the plan still works for you. 

    Kind of recapture those feelings. Remember how good you felt the day you finally got your plan in place? it’s like OK. Well, you know. Come back to it to make sure it still works as your life changes.  

    And just, personally, as a lawyer is my favorite part of my practice. Is hearing about clients’ lives and what they’ve done with themselves and what their goals are. So hopefully it’s a good conversation to have.  

    Now you know some of the big trigger points. And so if you’ve had any of those recently schedule a call or just you know sit down and think about it. You know, make sure you’re in a good spot. So my contact information here at the end of the video, you can always book online or give me a call. And I’d love to talk to you. Thanks. Bye. 

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  • Video: Estate Planning for Young Adults (Part II)

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    Hi folks, it’s Andy Stautz at Stautz Law. Today I’m back with Part 2 of our discussion on estate planning for young adults.  

    So in Part 1 I talked about kind of the trade-offs, the balance between, you know, the complexity of your family and property situation versus the cost and time of doing formal estate planning.  

    Today we’re talking about specific situations, some like real basic plans.  

    So if you’re a young adult, let’s say you’re 30, you’re not married, you have no kids. Your plan could be really simple. It can be, you know, beneficiary designations on your retirement account; transfer on death deed for your House; and then a will to just take care of whatever is left. That way the bulk of your property is going outside of probate. You can probably use the small estate affidavit for the rest. Great.  

    As soon as you get married the situation changes. Your spouse becomes, you know, number one person by default on your healthcare representative. Your intestate heir. So. For a married couple, the same scheme can work for property. Healthcare decisions probably made mutually. Uh, but it’s just something to keep an eye on. You know, when you get married, that’s a big change because your spouse instantly steps in to, like, all the roles.  

    (So… I’ll probably do a follow up video on when to change your estate plan or like when to revise. Start thinking about it and marriage is a big one. So is divorce. So is having children.) 

    The same scheme can work for a married couple, you know, just beneficiary designations take care of a lot if your property is mostly retirement accounts and house.  

    Uh. Situation changes if you have rental properties. Because you should have those in an LLC (If you don’t talk to me about that separately.) Your interest in an LLC is a probate asset unless you do more, so that’s probably trust time.  

    It’s also trust time if you have kids, because once you have children. They become your… or you know they have an intestate share right away, even though they are minors and can’t. You know, do anything with it.  

    So if you don’t want to accidentally leave a ton of property to children requiring a guardianship, if there’s no surviving adult responsible. And if you don’t want to leave a bunch of money to someone the day they turn 18. (Usually, Yikes, But, you know it’s your own decision to make, I guess) A revocable trust makes tons of sense for married couples with children because it lets you set thresholds for distributing your assets to your minor children over their lifetime. You can set up discretionary educational trusts in your revocable trust. So you know, usually that’s worth it. UM. It’s a lot more flexible, a lot more private, a lot easier to administer than a testamentary trust, which can go in a will  

    (Kind of old school that some people will have a will and then the will says. Oh by the way, if my beneficiaries are minors then you know create this trust for them. It’s like, well, it’s better to have that done beforehand because then you avoid probate, you keep some privacy. And you can you can be a little more elaborate in your planning, then, too. . . . .Although there’s no theoretical limit, I guess, even in a testamentary trust, but… Personal preference I suppose. Anyway, that’s an aside.)  

    So those are some basic those are some basic schemes you know for single people. UM, it can be easy. Hopefully you can do it, most of it, outside of probate and then just a simple will. For married couples, and especially married couples with children, it makes sense to get some trust in place there.  

    And again, business interests are a biggie, so if you’re, if you’re running your own business, that needs special thought and that instantly puts you into the “Yep, have a plan.” Versus just a W2 wage earner. Or two.  

    So I hope you’ve enjoyed this brief overview. Obviously everybody’s personal situation is different, so come in for your planning meeting. We’ll talk about your situation and then based on what you need. You know that’ll that’ll determine. Where exactly we go from there, but that gives you an idea. Hopefully that’s enough to go on and start reading about if you want more education, but you can book online here on stouts law or you can just give me a call. Love to hear from you and talk to you about that. Thanks and bye.

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  • How Does a Revocable Trust Work?

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    Hi, it’s Andy Stautz with Stautz Law. Today we’re talking about revocable living trusts. This is a huge planning tool for the most typical clients.  

    But there are lots of questions. What is a revocable living trust? How does it work? Do I need one? And it’s worth explaining the basics here. So you kind of know what you’re getting into.  

    A revocable trust is just a trust that can be revoked: revoke-able trust. Umm, it’s a living trust because you make it while you’re alive and you can change it while you’re alive. And a trust is a set of instructions for how someone else [or yourself!], a trustee, should manage the property in trust.  

    With a revocable living trust you make it yourself. And you make yourself the trustee and you make yourself the lifetime beneficiary. So you’ve created this legal structure that kind of redefines your role relative to your property.  

    But nothing else changes. It’s a legal fiction in that regard.  

    So if you create a revocable trust, you take your property and you change the title, you change who owns it in the eyes of the law from “you, yourself” to “the trust and you as trustee of your own trust.” And that doesn’t make any difference while you’re alive. If you, assuming you, name yourself as the life beneficiary, you know, you still get to control what you do with the property. Everything’s the same.  

    Except when you die, because the property is in trust rather than owned in your own name, it goes outside of probate. It goes according to the instructions in the trust instrument. 

    So as a planning device, it’s great, right? Your setting the trust up in advance lets you use the property just the same as if you had never done it. Until time of death, when all of a sudden you get the benefits of, you know, naming other beneficiaries, naming a successor trustee, right? Umm. And that can be as simple or as complicated as you want.  

    It can be as simple as OK. My trust is mine while I’m alive. When I die, it distributes all the assets to beneficiaries A, B, and C. My children. In which case it’s basically a will. Except no probate. It costs some money to set up, but it saves you expenses on the back end and makes life easier for your beneficiaries.  

    Or it can be more complicated. You can set up a revocable trust that will have a continued life. That will stick around. Maybe you’ve got minor children or minor grandchildren. And you don’t want the distribution of trust assets to happen all at once. You can stage it. You can add life milestones. You know: when they graduate college, when they turn 30. Whatever else. Powerful planning tool.  

    It depends on this planning ahead though. You have to set up the trust during your lifetime. You have to move the assets into the trust so that the legal fiction works. But it doesn’t change anything about your lifetime use of the property.  

    So those are the basics. Obviously, whether it’s right for you or what exactly your revocable trust should contain are personal questions: that’s legal advice that you need to come in for a planning meeting for. And that’s exactly what we’ll do: Talk about your situation. See what you need and come up with the best plan for your family, your property.  

    You can book that planning meeting online. You can give me a call. I look forward to working with you soon. Thanks for watching!

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  • “Does a Will Avoid Probate?” Answered!

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    Hi, it’s Andy Stautz with Stautz Law. Today I’m back to answer another common estate planning question and that is: does a will avoid probate?

    So a client comes to me and says “I’ve got a will. Does that mean my heirs, my beneficiaries, don’t need to go to court, don’t need to do probate with all of the expenses and public filings and legal fees?”  

    Unfortunately, the answer is no. A will does not avoid probate.  

    Probate is the court supervised process of carrying out a will – of giving a will effect. So if you make a will you are basically telling the probate court how to do things. So as we discussed earlier, in “Do I Need a Will?” one of my other videos, you don’t need a will.  

    A will is a step up over no plan at all. But it doesn’t accomplish probate avoidance, which is many people’s goal. If you want to avoid probate, you need some other plan more than just a will.  

    A common one would be a revocable trust. I love those because they’re just . . . They’re private and they’re very powerful. You can give any instructions you want in a trust. Umm. And have it administered, you know, entirely according to your instructions, without going to court. It can save lots of time. Lots of money. In addition to letting you, you know shape things how you want. 

    So usually, in fact, I would contend, hopefully always, the expense of going to a lawyer and having a revocable trust set up or some other probate avoidance plan is always going to pay for itself. Not always. That’s my caveat.  

    So a will does not avoid probate. Better than nothing. But if you want probate avoidance, you need other strategies: that can be a trust, that can be beneficiary designations, which we’ve talked about elsewhere.  

    If you come and see me for an initial planning meeting, we’ll talk about your situation and we will see what makes sense for your goals. There are a lot of planning techniques out there, and it’s a matter of finding the right plan for you. So book an appointment online or give me a call. Look forward to working with you. Thanks for watching!

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  • Talking About . . . Trust Terminology

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    Transcript

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    Hi, welcome back. It’s Andy Stautz at Stautz Law and we’re here for another quick informational chat, this time about trust terminology, aka the lingo.

    Oftentimes, clients are intimidated by all the the new terms, the new words they run into when they’re talking to their estate planner, or starting to read about estate planning and and think about their options. So especially in the in the trust world, which is just a part, but an important part of of what I do for my clients, it’s worth knowing some of the terms so you can think about how how you want your plan to work and you can go into your planning meeting confident that you know what’s going on.

    So just going back to basics, umm, a trust is a legal relationship. . . . between three people. There is a settlor, or a grantor, (2 names for the same thing), and that’s the person Who gives the property. And then there is the trustee. The trustee is the person who holds the property. And then there is the beneficiary. The beneficiary is the person who enjoys the property.

    [T]he clever idea of a trust is to separate the ownership, which is in the trustee’s hands, and the use and enjoyment, which is in the beneficiaries’ hands. So your basic three players are the settlor or the grantor, sometimes you know, it’s even called a trustor, but that’s very rare. The trustee just called a trustee. No alternate terms there. And then the beneficiary.

    And umm, the confusing part sometimes. Is that a grantor can also be a trustee? And also a beneficiary. Kind of in some circumstances.

    And so that leads us to our next topic, which is OK. About all the different names for trusts. You know — what’s the difference between a revocable and an irrevocable trust? A grantor or non grantor trust? What about an asset protection trust?

    And the thing there to understand is those are just descriptive titles. Those are just different ways of explaining the type of trust you’re talking about. Because the basic concept of separating legal and equitable ownership. Can be used in so many different ways. So if you’re saying a trust is. Revocable or irrevocable, that just means that the grantor can decide to take it. And unwind it, versus irrevocable. Irrevocable can’t be. . . The trust can’t be undone once it’s been made.

    Same thing with. You know, a grantor trust for tax purposes is one where the grantor retains, you know, is still the beneficiary in some way. Umm. Versus a non grantor trust.

    Same thing with a self settled trust. As you might imagine, the self settled means the settlor, the grantor. has put the property in trust for himself or herself, so self settled.

    And so for many of these concepts, you . . . They can be. . . They’re just descriptive terms and and sometimes. You know, it’s kind of insider knowledge, OK? A Medicaid asset protection trust. Do we call it a MAPT or . . . . ? You get to sophisticated, you know, SLATs and GRATs, and you know all these increasingly esoteric acronyms.

    They’re all just different ways to describe the type of trust that’s being used. Just a convenient technical short hand.

    But the basic terms to remember settlor or grantor, trustee, beneficiary. And that basic relationship works for all trusts, no matter how complicated, because that’s what makes the trust the trust.

    Hope you’ve enjoyed this overview. If you’re ready to talk trusts with me, I would love it. You can book an initial planning meeting online. You can give me a call. And I look forward to working with you with personalized advice for for your situation and come up with the best plan that’s that’s going to work for you. Until then, bye now!

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    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

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