Living Trust is one of the more frequently used elements used in Estate Planning.
One reason for this is that a Living Trust helps avoid the legal process of Probate.
Here’s a way to understand the basic elements of it and the terminology used: The acronym is T.R.U.S.T.
- T stands for Trustor – this is the person who creates the trust.
- R stands for Recipients, these are the Beneficiaries of the
- U stands for Understandings, the written documents that
establish the trust. This collection of instructions and require-
ments abides by (and incorporates) a set of federal and state
laws. Because it’s important that the understandings are prepared
properly, we encourage the Trustor to meet with their attorneys and
accountants to discuss the trust and its relationship to their overall financial picture.
- S stands for Substance, these are the Assets placed into the trust. Trustors can use various assets to fund a trust, including a house, investment accounts, real estate, and other valuable assets they may presently own. Once the Trust is funded, it is the Trust that then owns the assets in the Trust. This is why it’s a good idea to use assets that have increased in value since you first acquired them, because you can avoid capital gains taxes if they are sold. Another wise option is to use assets that have value, but produce little or no income for you. Through the trust, these assets can be sold and turned into assets that produce higher income.
- The final letter, T, stands for Trustee, the person that oversees the trust. The trustee is legally responsible for making sure that the understandings in the trust document is honored. Initially, the Trustee for a Living Trust can be the person who is establishing it – the Trustor. A successor Trustee is also named. This is a person you can depend on to fulfill your wishes into the future when you are no longer here to do so.
To name the Ananda Janaka Foundation as a beneficiary of your Trust, please use the following information:
The Janaka Foundation, Tax ID: 94-3400189