Houston Estate Planning and Elder Law Attorney Blog
A trust is a complex document, but taking the time to read it a few times will prove enlightening. If you have questions, call your estate planning attorney, so they can help clarify anything you don’t understand.
Attorneys do try to simplify documents when they can, so that clients will have a better understanding of what goes into their estate plans. However, according to a recent article from Forbes, “A Beginner's Guide To Reading A Trust,” there’s still enough legal language in trusts that they can sometimes be confusing. Here are some basics about trusts.
First, familiarize yourself with the terms. There are basic terms of the trust that you’ll need to know. Most of this can be found on its first page, such as the person who created the trust. He or she is frequently referred to as the donor, grantor or settlor. It is also necessary to identify the trustee, who will hold the trust assets and administer them for the benefit of the beneficiaries, and any successor trustees.
You should next see who the beneficiaries are and then look at the important provisions. See if the trustee is required to distribute the assets all at once to a specific beneficiary, or if she can give the money out in installments over time.
It is also important to determine if the distributions are completely left to the discretion of the trustee, so the beneficiary doesn’t have a right to withdraw the trust assets. See if the trustee can distribute both income and principal.
The next step is to see when the trust ends. Trusts will end at the death of a beneficiary.
Other important provisions include whether the beneficiaries can remove and replace a trustee, if the trustee must provide the beneficiaries with accounting and whether the trust is revocable or irrevocable. If the trust is revocable and you’re the donor, you can change it.
If the trust is irrevocable, you won’t be able to make any changes. If your uncle was the donor and he passed away, the trust is most likely now irrevocable.
In addition, you should review the boilerplate language, as well as the tax provisions.
The more you read the trust, the more familiar you will become with the provisions, even the ones that appear confusing at first. The estate planning attorney who created the trust will be able to explain it to you, or you may wish to speak with another attorney to get a different professional view of the trust.
Reference: Forbes (June 17, 2019) “A Beginner's Guide To Reading A Trust”