Klenk Law

Trusts: Understanding Grantors and Trustees

Posted on Fri May 24, 2019, on Trusts

Trust Lawyer in Cherry Hill, NJ

If you have been designated as a trustee or successor trustee for someone else’s trust, a trust attorney can understand that you may have numerous questions. Successor trustees don’t need to do anything until the grantor (the person whose trust it is) can’t manage his or her own finances due to being incapacitated, or when he or she passes away. If you have been appointed as a trustee, however, you may already be acting in that capacity. In either circumstance, it is necessary that you are aware of and understand your duties and responsibilities. 

What is a trust?

A trust is a legal document that can “own” assets. It looks much like a will. Like a will, a trust includes instructions describing who handles the grantor’s final affairs and who receives his or her assets after death. There are different kinds of trusts, including:

  • Testamentary trusts (created in a will after someone dies)
  • Revocable living trusts (can be changed or altered as long as the grantor is still living)
  • Irrevocable trusts (usually cannot be changed)

Many people use a revocable living trust in their estate plan in place of a will because it avoids probate court interference at death and at incapacity. It also provides flexibility. As long as you are alive and capable, you can change your revocable trust document, adding or removing assets, or even canceling it.

How does a living trust work?

As a grantor (the person who holds the trust), you must transfer your assets into a living trust for it to function correctly. Titles on paperwork pertaining to your assets must be changed from your individual name to the name of your trust. Since your name is no longer on the titles, the court has no reason to get involved if you become incapacitated or pass away. In this situation, it very easy for a trustee or successor trustee to step in and manage your financial affairs.

Only the grantor(s) can alter or make changes to a trust. The named trustee manages the assets that are in the trust. People often choose to be their own trustee instead of appointing someone else, and continue to manage their own financial affairs for as long as they are able. 

Married couples can set up one trust together and are considered co-grantors of their trust. Married couples are often co-trustees, as well, so that when one dies or becomes incapacitated, the surviving partner can continue handling their finances with no other actions or steps required, including court interference (probate).

A successor trustee is a person or sometimes an entity named to step in and manage the trust when the original trustee is no longer able to continue, typically due to incapacity or death. Generally, several successor trustees are named in succession in case one or more cannot act. Sometimes two or more adult children are appointed to serve as trustees together. Sometimes a corporate trustee, such as a bank or trust company is named. Or, it might be a combination of the two.

All this can be a bit overwhelming and confusing, so to get more information about how a trust can work for you, schedule a consultation with a qualified trust lawyer in Cherry Hill, NJ.

Contact Klenk Law for their insight into estate planning and grantors and trustees.

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