It is not uncommon for people to be confused about the legal definition of a trust and how it works within the legal system. A trust refers to property given to a trustee to manage for the benefit of another person, who is disclosed within the documents of the official legal papers. In most cases the beneficiary receives interest and dividends on the trust assets for a predetermined amount of time, and this is usually for a number of years. Under the conditions of a trust, an agreement is made where one person transfers the title they hold to a specific property to another person who agrees to manage it for a third party. This is a beneficial process as the party who has transferred the title (the beneficiary) stands to greatly benefit from having another person oversee it for them.
An individual may control the distribution of their property by establishing terms and conditions within a written trust. This can then be used while they are living or after their death. There are many different types of trusts, which have different purposes and functions. A trust may be intended for the benefit of the person who created the trust, or it can be for their surviving spouse or minor children, or for a charity. However, any trusts that are created with the intention of evading creditors or other lawful obligations will be voided by the courts. In general, trusts are created during a person's life in anticipation of their death. This can be done early on in life or later in life, and modifications can be made as time proceeds as long as a qualified real estate lawyer in involved to help. Trusts are the perfect way to ensure that the plans you have for your assets - money, property, etc. - are successfully carried out once you have passed and can no longer see to it that they are followed through in the way you originally desired.
The individual who creates a trust is the settlor, whereas the person who manages the property for another person's benefit is called the trustee. It is the beneficiary who benefits from the trust, not the trustee. A trustee has a duty to act in good faith with strict honesty in regards to administering the trust and serving the interests of the beneficiaries of the trust. A breach of the trustee's duty, known as a fiduciary duty, can result in negative ramifications including a court action and even criminal charges. Therefore, it is very important that a legal professional is involved in the process in order to ensure that no unintentional breaches are made which could wreak havoc down the line.
When you have agreed to be a trustee, you are assuming a large responsibility that you must carry out in full accordance with the law. An attorney can help you in more ways than one by ensuring that you follow all proper protocol so you adhere to the law. Furthermore, if you do encounter an IRS investigation, or if you are taken to court by any of the beneficiaries, an attorney can protect your rights in a lawsuit. As a trustee you have many duties that include: keeping all funds in a separate trust account, you must avoid conflicts of interest, you must manage the funds by making sure they get some kind of financial return while avoiding high-risk investments, you must maintain excellent records, you are required to pay the taxes on any trust income, and you are required to take very good care of the beneficiaries and not violate the trust instructions in regard to them.
Whenever you are assuming a great legal responsibility, it is in your best interests to consult with an attorney. This is especially true when it comes to matters of estate planning and trust administration. In these instances, you will be expected to oversee the assets that are held within a trust, and as such, you will essentially be taking on the same responsibilities as a legal property owner. In fact, this is a type of ownership, either of personal property or real estate property; the difference is that it is an ownership that is being split between the trustee and the person who entrusted their belongings to them. It is therefore up to the trust administrator to oversee the trust, including the distribution of assets, etc. as directed by the creator of the original trust. Because this is a complicated process and one that is highly personal in nature, it is one that must be handled with the utmost care and attention. Therefore, taking measure to ensure that you act under the legal guidance of a professional real estate attorney could make a world of difference in how your case plays out. An Orange County estate planning attorney can provide you with invaluable counsel into your legal obligation and responsibilities pertaining to trust administration. They can also tell you what steps you can take to avoid making any costly legal mistakes during your appointment as a trustee.
Watkins, Blakely & Torgerson, LLP is an Orange County, California estate planning and probate law firm. The firm has dedicated itself to helping the residents of Orange County since 1967 and they have earned a reputation in the legal community for having outstanding commitment and dedication to their client's estate and probate needs. The firm offers a wide variety of services including: estate planning, probate, trusts, wills, IRS investigations, general taxation, business and corporate law, as well as copyrights, trademarks and service marks. If you need assistance with trust administration, they invite you to contact an Orange County estate planning lawyer from the firm by calling (714) 908-4230.
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