Trusts are useful tools for estate planning for many reasons, but they can be confusing if you don’t understand the basics of a living trust. They also can be complicated if you don’t work with an experienced estate planning attorney to make sure the trust is comprehensive, well written, and reflective of your wishes. Administration of a well-crafted trust is easy to comprehend and to carry out.
The attorneys at Bland & Birdwhistell, PLLC have helped hundreds of clients in Elizabethtown, Kentucky and surrounding counties create trusts, guiding them through the process of establishing a trust and helping them, their trustees, and their beneficiaries understand how they are administered.
Anyone age 18 or older can establish a living trust in Kentucky. The person who creates a trust is called the “settlor” or “grantor.” The settlor conveys property to a trustee who manages the assets of the trust until such time the settlor directs the assets to be distributed to one or more beneficiaries of the trust.
While everyone should have a will, there are two major benefits to also having a trust as part of your estate plan. First, if all the settlor’s assets are included in the trust, the estate will not have to go through probate upon the settlor’s death. Probate takes a minimum of six months in Kentucky and attorneys representing the estate charge an hourly fee or an average of 4% to 7% of the estate’s value. That means distributing the decedent’s assets will require less time and cost than when an estate has to go through probate to be settled.
Second, because the estate does not go through probate, which is a public judicial process, the identity of the decedent’s assets remains private.
The trustee is the person who manages the trust then distributes the assets according to the settlor’s wishes. Settlors often name themselves as the primary trustee and name someone else as a successor trustee. The successor trustee takes over the management of the trust upon the incapacitation or death of the settlor.
The trustee has six major responsibilities in that role:
To identify beneficiaries of the trust by knowing who the beneficiaries are and how to locate them.
To pay administrative expenses, including the grantor’s funeral and burial costs, insurance premiums for assets, asset appraisal costs, and fees for accountants and attorneys for services rendered on behalf of the trust.
To address debt, including mortgages, loans, credit cards, and medical debt.
To distribute assets according to the provisions of the trust by making sure the grantor’s wishes are carried out as specified.
To prepare the trust’s taxes every year until all assets have been distributed and there are no more assets belonging to the trust.
To create a reserve fund to cover things like maintenance and repair of trust assets. For example, if real estate property needs to be mowed, money from the reserve fund would pay the person who handles the mowing as long as that property is an asset of the trust.
According to Kentucky’s Uniform Trust Code, trustees are required to “administer the trust in good faith and in accordance with its terms and purposes and the interests of the beneficiaries.” An experienced trust administration attorney can assist in performing the duties required.
Whether you wish to create an estate plan to specify your end-of-life wishes and want to understand the role of your trustee, or you have been appointed as a loved one’s trustee, an experienced trust administration attorney can help with the process. The attorneys at Bland & Birdwhistell can review your options and guide you through key decisions. Each estate is different so having knowledgeable legal counsel on your side is an invaluable tool. You don’t have to go through this alone.
The attorneys at Bland & Birdwhistell, PLLC offer experienced and comprehensive legal guidance to clients in all areas of estate planning and trust administration. We understand how difficult and emotional it is to settle a loved one’s estate. That’s why we’re here to help you through as peacefully and efficiently as possible. We proudly represent clients in Elizabethtown, Kentucky, and surrounding areas including Radcliff, Shepherdsville, Bardstown, Brandenburg, Leitchfield, Hodgenville, and Louisville. Call today to schedule a free case consultation.