10th Apr 2019
The first blog post in this section on Trusts looked at the three basic parties to a Trust: the Settlor, the Trustee, and the Beneficiary. The second looked at when a Trust begins. This post focuses on property issues in setting up Trusts.
The Property Part of a Trust
Using the perspective of the first blog post: the Settlor contributes property to the Trust, the Trustee manages the property in the Trust, and the Beneficiary receives benefit from the property in Trust. The property in Trust is called the “res” – or sometimes the principal or estate or fund or other similar terms.
A Trust is Like a Cup
Often when I visit with clients, one of these handsome cups is on the table (come see me if you want one!), and it can serve as a good illustration of this aspect of a trust. Trusts work on the property that is inside them.
A cup can be a gold goblet or a dixie cup, but unless it has water inside it, it does not “work” and is not very useful. This is the same with Trusts. They can be revocable or irrevocable, living or testamentary, long or short, relatively complex or relatively simple. But if they do not have property in them, they do not “work” and are not very useful.
Funding is the term for making sure there is property inside a Trust. This can happen in a number of ways: deeds, bills of sale, retitling assets, decrees, etc. But it is key that funding happens.
I have the unfortunate task of routinely having to tell clients that they have a Trust document or agreement – but not property inside it. Which is like having a cup with no water inside. It is often too late to do funding if the settlor or creator of the trust is deceased. And in that case, there is usually extra expense and hassle, at least, and often other complications such as their estate plan not working how they intended or a fight.
If our office may be of assistance to you in these areas, do not hesitate to contact us at (580) 338-6503 or at email@example.com or using any of our contact information in the profile. You can also visit www.fieldandhicks.com for more information.
This blog contains general information and the opinions of the author – not legal advice; you should seek the advice of competent counsel (attorney/lawyer) when considering any legal issues.