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Micky Gramlin
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Micky Gramlin   My Press Releases

Estate Planning 6: Types of Trusts

Published on 12/8/2018
For additional information  Click Here

 

Image result for WILL AND TRUSTS

 

I will state my usual here, that I am no financial guru, nor am I licensed in any of these fields. This is a series that I am putting together for my sons and six granddaughters and sharing the information

 

“When considering if you need to hire an estate planning lawyer, consider this - estate planning is serious business. One wrong word or one missing signature can change the entire intent of a will or trust.”

 

TYPES OF TRUSTS

 

An irrevocable trust is a trust which may not be revoked, restated, or amended by the grantor. Once it has been drafted, it is etched in stone. This does not mean the trust cannot have flexibility. 

Trusts may be categorized in many ways. One useful way to differentiate between trusts is intervivos and testamentary. An intervivos trust is simply a trust which is created during life. Another name for an intervivos trust is a living trust. A trust need not have intervivos or living in its title. A trust, intervivos or testamentary, may be named whatever is desired by the client, as long as it is not misleading or in violation of copyright, for example

A testamentary trust is one created at death. A testamentary trust is, by its nature, not revocable by its grantor. Of course, the document creating the testamentary trust might be revoked prior to the death of the grantor.

For example, a Will could create a testamentary trust. The Will could be revoked during the life of the testator/grantor and a new Will could be drafted which has different terms for the testamentary trust.

 

Image result for WILL AND TRUSTS

An intervivos trust might be income taxed to its grantor. A testamentary trust is not income taxed to the grantorIntervivos trusts may be either revocable or irrevocable. In some states, if a trust does not specify whether or not it is revocable, it is revocable. In other states, a trust is irrevocable unless specified otherwise.

Therefore, it is always prudent to specify whether a trust is revocable or irrevocable.

A revocable trust means that it may be modified or revoked by the grantor during life while the grantor has capacity. A revocable trust may also be restated. A restatement leaves the shell of the trust but guts the substantive provisions and replaces them with the new ones.

When a trust is created, assets are retitled into the name of the trust. If one simply does a new trust, the assets would need to be retitled into the new trust. A restatement obviates the necessity of retitling the assets into a new trust because the old trust still exists; only its terms have changed.

Typically, a restatement is more convenient than amendments which require referencing back to the original trust and may be cumbersome. Also, when amending a trust, the drafting attorney risks being liable for any errors in the drafting of the underlying document. This is fine if the drafting attorney’s firm drafted the underlying document and has that liability anyway.

However, if someone else drafted the underlying document, then a restatement is typically the best route to go. Otherwise, it is necessary to go through the original document with a fine-tooth comb to ensure there are no drafting errors in its language.

 

Image result for WILL AND TRUSTS

 

If you are doing a restatement, errors in the language of the original document become irrelevant as the underlying document has been replaced in its entirety. Only the shell has been retained and the restatement document has added all new substantive provisions. As a result, restating a trust is often far more efficient and less time-consuming than amending a trust.

 

Thank you for stopping by!

Micky Gramlin

 

RELATED POSTS 

Estate Planning: A Checklist

When Do You Use An Accountant For Your Estate Or Business

Estate Planning 3: Bankers

Estate Planning 4: Real Estate Investors

ESTATE PLANNING 5: What Is Elder Law?

 

Source

EstatePlanning.com

sokanu.com

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Google

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