Trust

Your Guide to Creating a Trust

What is a Trust?

A Trust a written Contract between the Grantor (that’s you), the Trustee (the person who manages the Trust), and the Beneficiaries (the people who benefit from the Trust). The Contract pertains to the Trust Assets (the money or other stuff that you place in the Trust). Terms like “Grantor,” “Trustee” are cumbersome legal terms. For the sake of this explanation, let’s change them.

Let’s pretend that you have want a portion of your money to provide education expenses for your young children even if you die or lose your capacity to make decisions. You write a note to your sister. You write, “Sister, If I die or cannot lose my capacity to make decisions, I want you to use $X, which I am putting in Western Bank, to pay for my young children’s education expenses. When my youngest child is 18 years old, I want you to give each of my children parts of the remaining money.” After you’ve written the note, you go to Western Bank and place $X in a new bank account and you tell Western Bank that your sister gets access to this money.

That note to your sister is sort of like a Trust. You, the Grantor, write a note (the Trust) that gives your sister (the Trustee) rules about handling the money you place in Western Bank (the Trust Assets).

A Trust is much stronger legal document than the note to your sister in the example. A Trust will set out specific rules for your sister. A Trust will refer to your state’s rules about trusts, which helps make it a strong legal document. Under a Trust, your sister (the Trustee) has duties to abide by the Trust, and if she does not your children (the beneficiaries) can take legal action against her and/or get a new Trustee. A Trust is enforceable in a court of law and regulated by a whole section of the Connecticut code.

Should you use a Trust as part of your Estate Planning?

• If your goal is to financially provide for minor children or an adult who does not have the ability to manage finances, then a Trust might be a good option for you.
• If your goal is to provide for yourself, even after you cannot manage your own finances, then a Trust might be a good option for you.
• If your goal is to avoid Estate Tax or Probate Expenses, then a Trust might be a good option for you.
• If your goal is to provide your family with access to your money/assets quicker than if they needed to wait for the Probate process, then a Trust might be a good option for you.
• If your goal is to keep your finances private, then a Trust might be a good option for you.
• If your goal is to support a charity, then a Trust might be a good option for you.

The Law Office of Angi Haen can guide you through the decision of whether a Trust would help you meet your Estate Planning Goals. Please contact me to schedule an appointment.

Federal and State Estate Tax

You can use Estate Planning tools, like a Trust, to ensure that more of your money goes to your family and less to the government for Estate Tax liability or Probate Costs. The Estate Tax and Probate costs vary depending on the value of the Estate

Estate Tax: In the year 2022, the federal government excludes from the estate tax estates that are $12,060,000 or smaller, and the Connecticut government excludes from the estate tax estates that are $9,100,000 or smaller. Therefore, you may not need a Trust to avoid an estate tax if your estate is smaller than $9,100,000.00 and you live in Connecticut.