Declaration of a Trust Vs. a Settled Trust

Estate planning enables you to make decisions about how to care and provide for your family and close loved ones when you die. Common estate plans implement a will, a trust or sometimes both. The declaration of trust creates the trust; settling the trust is the process of complying with the terms of the declaration.

Trusts

A trust is a way for you to house your assets and to describe the circumstances under which your beneficiaries (the people benefiting from the trust) can gain access to those assets. A common trust is the revocable or living trust. Your create this trust during your lifetime, and while you are living, you can modify it, amend it or even revoke it as you see fit. One particular advantage to using a trust is that the assets you place into it fall outside of probate, the judicial procedure used to administer and distribute your assets. Probate can be time consuming and expensive; avoiding it is often advantageous.

Declaration of Trust

The declaration of trust is a legal document that creates the trust and sets forth its terms and requirements. In the document, you must appoint a trustee and name beneficiaries. You also describe how you want the trust managed and operated. The trustee carries out your wishes in favor of the beneficiaries. For example, if you own rental property, you may title that property into the trust and direct the trustee to pay the beneficiaries income earned from that rental property periodically (such as monthly or quarterly).

Funding the Trust

You must fund the trust for it to become operative. The declaration of trust, by itself, is an empty shell. By funding the trust, you provide sustenance to it. You can fund the trust by opening bank accounts in the name of the trust and transferring title to assets over to the name of the trust. If you need assistance funding your trust, seek legal aid.

Settling a Trust

Settling the trust is the process of administrating it according to the terms of the declaration of trust. According to Free Advice, a legal information website, the time it takes to settle a trust varies depending on what needs to be done. For example, the trustee may need to notify beneficiaries, inventory and value the trust assets and generally follow the deceased's instructions contained in the declaration of trust.

References

• "New York Times": The Pros and Cons of a Living Trust; Jay Romano; November 2005
• The Free Dictionary: Declaration of Trust
• Free Advice: How Long Does It Take to Settle a Trust and What Can I Do If It Isn't Done in a Reasonable Time?
• "The Washington Post": Funding a Living Trust; Robert J. Bruss; June 2007
• Toews Law Office: Settling the Revocable Trust in California; 2004