What is a Trust?
Q: I am interested in estate planning, but most lawyers go off the rails when discussing the use of trusts. Can you explain “trusts” in real world terms?
A: I understand the mental haze formed by a single word. Whenever my computer technician mentions a “server,” my mind fogs up.
I am happy to explain a trust in its most basic form. There are two major functions of a trust:
* A trust is like a rule book for your ownership of property.
For example, let’s say you own your home individually. There are no rules to your ownership. You can sell any time while you are alive, and leave the home to anyone in your will.
However, if you wish to take advantage of certain tax or Medicaid laws, or if you just wish to avoid probate -- a trust will impose certain rules on your ownership, which benefit you.
Trusts aren’t only for the 1 percent. In fact, Medicaid avoidance trusts are primarily used by the middle class to ensure government funding for potential nursing home care.
* A trust can split ownership of property so one person manages and one person benefits. This split usually occurs after you pass away.
For example, let’s say my wife and I should pass away early. Our two children will benefit by my meager assets -- which will be managed by my brother.
If a lawyer struggles to properly explain these concepts, or if this column doesn’t work for you, keep searching. You need to understand your estate plan.
Attorney James Haroutunian practices real estate law, estate planning and probate at 630 Boston Road, Billerica. He gladly invites questions at email@example.com or by phone at 978-671-0711. His website blog is found at www.hlawoffice.com .