When you hear the words “trust” or “trust fund,” the first image that comes to mind is a wealthy family in a mansion with inherited wealth passed down from generation to generation. However, you don’t have to be in the 1% to set up and benefit from a trust. Trusts, by their nature, can get pretty complicated. Whom you choose as trust administrator (trustee) can be as important as the trust itself.
Different types of trusts accomplish different goals. But all have one goal, to transfer assets to heirs and beneficiaries while minimizing or eliminating estate taxes. There are trusts specifically used by married couples, trusts that benefit family members, pets, charities, and nonprofit organizations. The single caution when forming a trust is not to give away money prematurely that you might need later.
Type of Trusts
- Inter Vivos trusts or living trusts are created and active during the lifetime of the grantor. These trusts include a wide variety of beneficiaries and, since they involve ongoing investments, are best administered by a professional financial or legal advisor.
- Testamentary trusts are formed after the death of the grantor. The administration, in these cases, is typically a legal or financial representative.
- Revocable trusts can be changed or revoked entirely by the grantor.
- Irrevocable trustscan’t be changed or revoked by the grantor once they are legally implemented.
How Trusts Are Administered: The Role of the Administrator (Trustee)
The administrator manages assets that exist within a trust. A trust is created when an individual (known as a settlor) places their assets into the care of a third party (known as the trustee) for the benefit of someone else (known as the beneficiary). Trusts include a variety of forms and reasons for their existence, depending upon the wishes of the seller. Sellers (grantors) must understand how trust administration works and select an administrator that will best act on their behalf.
Administrators not only see to it that assets are distributed properly but also make sure that funds within trusts are managed to their best advantage. In this case, an administrator with the most experience in trust and financial management may be the best choice.
While assets remain a part of the trust, the administrator (trustee) is responsible for any investments made, ensuring that taxes are paid on properties or investment gains connected to the trust. Close friends or family members may be chosen as trustees, but it is important to be confident that the person chosen is qualified to handle the legal responsibilities connected to the assets and will carry out your wishes.
An Administrator You Can Trust
The Law Offices of Michael K. Lanning, APLC, specializes in the preparation and management of a variety of trusts. Contact us at 310-820-1600 or go to our website to learn more and set up a consultation.
We serve West Los Angeles, Santa Monica, Pacific Palisades, Manhattan Beach, and the surrounding Los Angeles communities.
The Law Offices of Michael K. Lanning, APLC
11777 San Vicente Blvd.
Suite 750
Los Angeles, California, 90049
