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3 Tips for Reading a Trust

If you are navigating a divorce or recently lost a loved one, you might find yourself going through several complex estate planning documents. You might discover that you now have interests in one or several trusts. While you might have established a trust with a spouse to take care of children after your death or a loved one might have created a trust for you to receive benefits, it is important to understand how to read and comprehend the terms of a trust. 

 

While many people are familiar with wills, many people are not exactly what trusts do or how to best interpret them. While the best approach begins with reading over the terms of the trust, there are also some other important strategies to follow as you prepare to retain the assistance of a skilled estate planning lawyer.

 

# 1 – Become Acquainted with Common Trust Terms

 

Regardless of the exact details in a trust, several common terms appear in most trust documents. Some important words to remember include:

 

  • A grantor, settlor, or donor is the person who created a trust
  • A trustee is a person who holds the trust assets and distributes them to beneficiaries
  • A successor trustee is tasked with managing a trust in case something happens to the original trustee
  • Beneficiaries are individuals who receive assets that are contained in a trust
  • Revocable means that a trust is capable of being charged
  • Irrevocable means that the terms of a trust are permanent and it is not possible to make revisions

 

# 2 – Hone in on the Key Terms of a Trust

 

Not all of the terms in a trust are created equally. As a result, while reviewing the terms of a trust you should focus on the most important elements. Some examples of provisions that are critical to a trust include statements that state:

 

  • A trustee has the right to distribute assets all at once to a specific beneficiary
  • Distributions are made entirely at the trustee’s discretion
  • The beneficiary has the right to demand that a distribution be made
  • The beneficiary can distribute principal, but not income from a trust
  • Assets from a trust must be paid to only one person
  • The trust ends in 2050 or when the beneficiary passes away
  • The beneficiary has the right to replace a trustee
  • The trustee must provide the beneficiary with accounting statements about the trust 

 

# 3 – Glance over Tax Provisions

 

The tax provisions found in a trust document will likely be complex. You are not expected to comprehend each tax-related statement, and you should not be embarrassed if you cannot do so. 

 

Instead, realize that an experienced estate planning attorney will be able to better describe to you the terms of a trust provision.

 

Contact an Experienced Estate Planning Lawyer

 

Trusts are just one of the many complex areas of estate planning law. If you need assistance with a trust or any other estate planning matter, it can help greatly to speak with a knowledgeable estate planning attorney. 

Contact Ettinger Estate Planning today to schedule a free case evaluation.

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