When most people think of trusts, they think of living trusts. That is something that a person creates while they are alive and that has a written trust agreement. There is another type of trust.
Revocable living trusts are now so common that many people assume all trusts are just that – revocable living trusts. However, there are many different types of trusts.
Trusts can also be irrevocable. In addition, not all trusts are living trusts.
A living trust merely refers to any trust agreement that a person makes during his or her lifetime. Another type of trust exists that people can make after death. It is called a testamentary trust. Many people have documents that create one, even if they are not aware of it, as NWI Times discusses in “Wills can create trusts.”
It is very common for a will to create a testamentary trust, when the person making the will has minor children. The language of the will leaves assets to the child as held in trust by a third party. That third party becomes the trustee and assumes all of the normal responsibilities of a trustee.
You might even have these provisions in your will and not know about it, if you have not reviewed your will closely enough.
Whether your estate plan creates a trust for minor children under a revocable living trust or a will, make sure that you understand what it will do (and not do) to protect and manage the inheritance. A qualified estate planning attorney can help you, and even make adjustments as may be needed.
Reference: NWI Times (Feb. 19, 2017) “Wills can create trusts.”
