What is a Settlor of a Trust? Learn About Law

the following BL TV program is brought

to you by O'Flaherty law please enjoy my

name is kevin o Flaherty from O'Flaherty

law and today we're gonna answer the

question what is a settler of a trust

also known as a grantor we're also going

to talk about some common mistakes that

grant tors make so first let's talk

about what a trust is a trust is both a

legal entity that can own property

separate and apart from its creator and

it's a the document that lays out the

rules of the game for how that legal

entity has to operate so it's kind of

like a corporation in that way it's

mostly used for state planning purposes

making sure assets are distributed to

the right people that they're managed

correctly that probate is avoided and

that estate tax is minimized so a trust

has at all times a trustee and a

beneficiary the trustee is the person

for managing the assets for the benefit

of the beneficiary according to the

terms of the trust and there will often

be successor trustees named to act in

order if something happens to the

original trustee if they choose to

resign as trustee there will also be

typically a plan for if something

happens to the beneficiary who is next

in line to be the beneficiary or

multiple beneficiaries of the trust so

the settler or grantor is the creator of

the trust they're the person that late

creates the trust document that lays out

the rules of how the assets are to be

managed how they are to be distributed

when they're to be distributed

importantly who the beneficiaries are

going to be how that is gonna play out

based on multiple contingencies over

time and who the trustees are gonna be

now the settler or grantor in a

revocable trust situation which is used

for a basic estate plan usually will

start out as both the trustee and the

beneficiary and then name people to take

on those roles after he or she passes

away or becomes mentally incompetent but

the settler creator is the person that

is creating the trust for the benefit of

either themselves or future

beneficiaries are both they name the

trustee and they lay out the rules of

game for how the trust assets are going

to be used they are also typically the

person that transfers assets of theirs

into the trust to make that's called

funding the trust to accomplish their

goals with those assets assets from

third parties can go into a trust but

it's typically the grantor creator

basically creating the trust to

accomplish either estate planning or

creditor protection goals with those

assets so now let's talk about common

mistakes that a grantor or settler can

make one is failing to provide clarity

within the trust and this can be clarity

on how the beneficiary designation is

going to pass down so you want to make

sure you've got all the contingencies

spelled out

it can also be ambiguities regarding how

the trust is to be managed or

distributed and if there's ambiguities

this is what causes disputes later on

and it can lead to costly litigation or

just strife within the family so you

want to make sure there's clarity within

the trust about what your wishes are

another mistake is settling the Trust's

creating the trust and then forgetting

about it and not making updates when

major life changes happen so there can

often be life changes that usually in

your family structure that caused the

the trust to become obsolete or need to

be updated so if you have a major family

change you should talk to your attorney

to see if your trust needs to be

modified usually trusts will provide for

multiple generations being born and you

don't every time a grandchild is born

you don't have to update your trust if

you've had a good attorney drafting it

in the first place but if you have a

falling-out with one of the

beneficiaries or the trustees or there's

somebody that you initially named

trustee that you're no longer close to

you may that's that's the situation

where you want to update the trust

another mistake people make is failing

to fund the trust and this is again

something your attorney to counsel you

on but there's a lot of estate planning

attorneys that just kind of use template

forms get paid to give the form to the

person and then wash their hands of the

case and consider themselves done well

what you need to do is

as a grantor of a trust is not only

create the trust itself but you need to

make sure that the assets the

appropriate assets are actually

transferred to the trust and this has to

occur over time now often you can

transfer title to a bank account to the

trust and then you just use that bank

account as your trust account and you

don't have to make anymore changes but a

mistake people make is thinking that

once the documents are drafted and

executed executed their job is done

there's a second part and that is making

sure that you do the appropriate things

whether it's filing a deed or changing

the title on the account to transfer

ownership of whatever assets you need to

transfer over to accomplish your goals

from your individual name to the name of

the trust finally if a state tax is an

issue if you're if you're a high wealth

individual then you should talk to your

attorney about your full estate tax

strategy and part of that strategy might

not just be your state plan it might be

a gifting strategy to remove assets from

your estate to your loved ones during

your lifetime and there's a basically a

cap annually on how much you can gift so

if you think that's going to be an issue

you want to make sure that from the

outset you're making the maximum gifts

you can make every year if that's part

of your strategy so if you have any

questions you can leave them in the

comments section below this post it

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