Legally establishing a trust does not put money into it.

Perhaps you or your parent(s) visited an attorney at some point and had a trust document drafted.  There are many kinds of trusts, but most are created to hold accounts or other items of value (assets) that would otherwise cause tax woes for either the trust creator or the beneficiaries of those assets upon the death of the trust creator. (See glossary below).

That’s planning ahead!  But what happens sometimes is that assets are never put into the trust and the planning goes out the window.

Is there a Trust?

The first thing to find out is whether you or a loved one has created a trust.  Usually there is a document that is kept with other legal documents like a will or power of attorney.  The will should have a reference to a trust within it.  The trust document often has a blue or tan ‘construction paper’ wrapper stapled to it.  Keep it in a safe place, preferably in a fireproof safe and make sure someone besides the trust creator can access it. 

Every trust has a name. It is often something like: the Revocable Trust of Mickey T. Mouse, dated 01/02/03.  There is no single account you can look at to see what is in a trust.  The only way to find out is to look at the paperwork for each asset of the trust creator and see how the asset is named/titled. 

For instance, a bank account held by the trust might look like:

       Mickey T. Mouse Trust dtd 01-02-03

            Mickey T. Mouse TTEE

            02 Main St., …

For real estate, the trust creator has to go to the Recorder of Deeds and get the deed retitled to the trust.  Each type of asset has different steps.  Not everything belongs in a trust.  Ask your attorney about this.

If no one bothers to take these steps, the trust is EMPTY!   There is no benefit in spending the money to create a trust if you don’t take the next steps to put things into it.  There is also the potential that significant tax benefits won’t be realized.

Having a trust means you must keep good records and have a filing system that helps you or your executor navigate your stuff. 

Who are the trustees and successors?

It is equally important to make sure that the trustees:

1. Know who they are
2. Are willing and able to serve
3. Understand what they are trustee of

The trust document spells out who is a trustee (often the person who created the trust, while they are still living) and who the backup(s) is/are.  It is very important to have successor trustees who are willing and able to serve if the trust creator falls ill or dies.  Trustees can resign and the trust document should specify who can appoint a new trustee.  If you are a trustee, it is important to understand your responsibilities.

When to Get Help

Some indications that you might need help with all of this are:

1. The trust creator is not keeping organized records.
2. Taxes are not being filed for the trust (if needed).
3. Assets have not been added to the trust.
4. The trustees are unable to serve and there are no successors.
5. The will references a trust but you know nothing about it.

As Daily Money Managers, we are adept at helping with 1 – 3.  It is best to give your estate attorney a call for items 3 and 4.

• Trust—the legal entity created by a trust document. The document identifies the type of trust, the beneficiaries, the trustees, the successor trustees and the disposition rules for whatever is titled in the name of the trust.
• Trustee–the person or company that manages the trust.
• Asset—anything that has a value: bank accounts, investments, a business, real estate, cars, etc.
• Beneficiary—person or entity that will receive (benefit from) some portion of an asset.

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