Alexandria, VA Estate Planning Blog

Thursday, March 29, 2012

Simple Trusts


Simple Trusts: What is a Simple trust?


A simple trust does’t have any specific meaning. When I refer to simple trusts, I often am referring to a trust that doesn’t have complex or detailed provisions. A simple trust is appealing to many people because they want to avoid perceived expensive estate planning fees and costs.


Simple trusts: What does a Simple trust do?


Simple trusts are better understood as probate avoidance trusts. Simple trusts pass all assets outright to a beneficiary as soon as practically possible (after decedent’s death). Simple trusts have little to no asset protection. Because simple trusts are probate avoidance tools, than there is no reason to create it after your dead (via WILL). 


Simple Trusts: The problems?


Simple trusts are problematic because they have to be funded correctly. Funding is the process of titling assets into the name of the trust (or making the trust a beneficiary upon death). If they are not funded correctly, probate may likely result and the purpose of the trust would have been defeated. Simple trusts also should generally not hold tax deferred assets because they lack the necessary provisions to avoid a tax disaster. 


Have questions about simple trusts, call our office. 


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