PROPERTY DISTRIBUTION & TRUST
Property Distribution and Trust
A revocable trust is created when an individual (the grantor) signs a trust agreement naming a person(s), a corporation (trust company or bank) or both as trustee to administer the trust. In many jurisdictions the grantor and the trustee can be the same person. In such cases, however, a co-trustee should also be named in order to ensure continuity of management in the event of death or disability. Naming a trust company or bank as trustee rather than an individual ensures that a competent trustee will always be available to act in the grantor is best interest.
A revocable trust typically provides that property be managed for the grantor is benefit. In most cases, the grantor retains certain rights over the trust during his or her lifetime. These generally include the right to instruct the trustee to distribute all or any portion of the trust property, as the grantor desires, and the right to change or revoke the trust at any time. The trustee is powers typically include the right to make discretionary distributions of income and principal to the grantor and, sometimes, to the grantor is family, if the grantor becomes incapable of managing his or her own affairs. When a grantor dies, the trust acts like a will, and the property is distributed to the beneficiaries as directed by the trust agreement.
While a trust may be funded upon the grantor is death, it is generally preferable to fund it while the grantor is living. This ensures continuity of asset management and financial support of the grantor, should he or she become disabled.
Funding a trust during a grantor is lifetime requires reregistering securities, real property and other assets in the name of the trust. Reregistration of property is not required in trusts funded at death where the probate estate is simply poured over into the trust. However, funding a trust at death does not avoid the necessity of probate.