Trust Law

A trust is a fiduciary relationship where property is transferred to a fiduciary called a trustee. The person who creates a trust by transferring property to the trustee is called the “grantor” or, alternatively, the “settlor.” A fiduciary is a person accorded great trust by the grantor and who, by virtue of that relationship, owes the grantor duties prescribed by law.

A revocable trust is a written agreement that places your assets into the hands of a trustee who holds it for your benefit during your lifetime, and transfer of those assets to a specified individual or individuals upon your death. The Grantor retains the right to amend or revoke the Trust during the Grantor’s lifetime. 

Irrevocable trust are different in one fundamental respect: the person who creates the trust relinquishes control over the property placed in trust. These are created for a variety of reasons and include special needs trusts, asset protection trusts, family legacy trusts, and Medicaid planning trusts. The point is that when an asset is transferred to an irrevocable trust, it can no longer be legally called your asset, even if you continue to derive some benefit from it. How irrevocable trusts are managed is a question of state law with countless variations (even amongst D.C., Virginia and Maryland). One should not attempt to create an irrevocable trusts without counsel. You might not get the protection that you sought from the trust, with potentially disastrous results.

Some of the most attractive benefits of trusts is that they do not require probate, provide for successive management of assets through the nomination of successor Trustees, and provide for management of the assets if the Grantor becomes incapacitated. Typically, a Will must be administered through the probate process, which can be costly, time-consuming, and public. As a result, the administration of a trust following a decedent’s death can allow for a more streamlined distribution of the assets contained therein without need for Court intervention. In many situations, the secondary beneficiaries become primary beneficiaries immediately upon the passing of the grantor.

No. You must fund the trust by transferring the assets to the Trustee. Only assets titled in the revocable trust at the decedent’s death avoid probate. Thus, any asset titled in the decedent’s name will still require probate.

D.C., Maryland, and Virginia each have a specific trust vehicle to provide for the care of a pet or pets that survive their owner. Creating a pet trust is an expensive and complicated process that may not be the best fit for most pet owners. However, it is the only truly legally binding way to make sure your pet is cared for in accord with your wishes because it is the only vehicle that appoints a second agent (the “trust protector”) to do what an animal cannot: enforce the terms of the trust in a court of law. You will need counsel to set up a pet trust.

Trusts are governed by state law. The rules and procedures regarding the types of disputes that may be brought and the individuals who have standing to bring a dispute vary among jurisdictions. A person who has standing is usually called an “interested person”, but that does not simply mean someone who is interested in the outcome. Rather, an interested person would experience harm if the trust terms were enforced as written. By way of example, a disinherited child of the settlor would typically be an interested person and would have legal standing to challenge the trust, but might still lose the case. Standing only gets you in the courtroom doors.

Yes. Moreover, a trust can be challenged on a technical basis. Each state has specific rules that must be adhered to when executing a trust. For example, state law might require notarized signatures of the settlor and witnesses.

Like any testamentary document, fraud, coercion, or undue influence in the creation of the trust can render it ineffective in the eyes of the law. Additionally, a trust cannot be created for illegal purposes, such as money laundering.

A trustee can be directed to make a contribution to a charity upon your passing. The trust documents can contain language that directs the trustee to provide a specific monetary amount or percentage of the value of the trust’s assets to a charity after your death or upon the dissolution of the trust. The specific charity or charities can also be identified.