UNDERSTANDING TRUST TERMINOLOGY

By Donna Furey, Esq.

• TRUST - A Trust is a legal entity under which the “TRUSTEE” holds legal title to property for the benefi t of “benefi ciaries.” The Trustee must follow the rules provided in the trust.

• IRREVOCABLE TRUST/REVOCABLE TRUST - An IRREVOCABLE trust is one that cannot be changed or rescinded by the person who created it and the person who created it cannot be the TRUSTEE, while a REVOCABLE trust allows the creator to change or rescind the trust and the creator can be the TRUSTEE.

Trusts are often used for Medicaid planning, tax planning, to avoid probate, to allow for someone with expertise to manage assets, to shelter assets and protect them from creditors, to protect assets for disabled persons, (Supplemental Needs Trust) and/or for long-term care planning.

• TESTAMENTARY TRUST CREATED THROUGH A WILL

WILL - A legally binding document that instructs who will receive your property at your death and appoints a legal representative, EXECUTOR, to carry out your wishes. A Will only applies to assets in your name alone that do not have a benefi ciary. A Will can also create a TRUST to protect assets for a benefi ciary. To enforce the provisions in a Will, the Will must be filed in the Surrogates Court for probate.

PROBATE - This is the process of notifying your blood relatives and beneficiaries you have passed away and that ownership of your assets should be transferred according to your wishes in the Will. The Court will issue LETTERS TESTAMENTARY to the Executor named in the Will. If the Will contains a Trust, the Court will issue LETTERS OF TRUSTEESHIP to the TRUSTEE.

Unfortunately, the Courts are extremely backed up due to COVID, therefore, you may want to consider creating a Trust that keeps your estate out of Court!