A defined trust agreement is a legal document that outlines the terms and conditions of a trust between a grantor and a beneficiary. This type of trust is often used in estate planning to transfer assets to heirs without the need for probate court proceedings.
A defined trust agreement provides specific instructions on how assets will be transferred to the beneficiaries, who will manage the trust, and when beneficiaries will receive distributions from the trust. It also includes provisions for the payment of any taxes or debts owed by the grantor.
A defined trust agreement can be revocable or irrevocable. A revocable trust agreement allows the grantor to change the terms of the trust or revoke it altogether, while an irrevocable trust agreement cannot be changed or revoked.
One benefit of a defined trust agreement is that it provides a level of privacy for the grantor and beneficiaries. Unlike a will, which becomes a public record after the grantor`s death, a defined trust agreement remains private.
Another benefit of a defined trust agreement is that it can protect assets from creditors, lawsuits, and potential beneficiaries` spouses. By placing assets in a trust, they are no longer considered the property of the grantor and are thus shielded from legal claims against the grantor.
However, there are also potential drawbacks to using a defined trust agreement. It can be more complex and expensive to set up and maintain than a simple will. Additionally, assets placed in a trust may not be easily accessible to the grantor during their lifetime.
Overall, a defined trust agreement can be a useful tool for estate planning, but it is important to weigh the benefits and drawbacks and consult with a qualified attorney before making any decisions. By doing so, you can ensure that your assets will be distributed according to your wishes and that your loved ones are protected.