What Does Trust Execution Mean?
Trust execution means, wait for it, the process of executing a trust. Many estate planning documents are fire-and-forget self-executing documents. But a trust document is not just a piece of paper, much like a property deed isn’t just a piece of paper. A property deed proves ownership of real property and establishes some rights and duties. Trust documents do the same thing. A trust isn’t valid until the settlor (person who makes a trust) follows proper procedure and puts property into the corpus.
So, to properly execute a trust, a St. Petersburg estate planning lawyer must do more than draft documents and oversee signatures. Attorneys must ensure trusts are properly executed, so the settlor gets all the benefits of a trust. A properly-executed trust is just one component of a comprehensive estate plan. Other components include a will, a living will, and a power of attorney. Only a St. Petersburg estate planning lawyer tailors these documents to suit your needs and goals.
What is a Trust?
To best understand trust execution, we should begin at the beginning. A trust is a fiduciary relationship, not a legal document. The settlor transfers property or assets to another person or institution (the trustee), who manages those assets for the benefit of a third party (the beneficiary). Trusts can be either revocable (changeable during the settlor’s lifetime) or irrevocable (generally unchangeable once created).
Usually, a trust is between two people. The settlor and beneficiary are usually the same person, especially in an inter vivos (living) trust.
The Trust Execution Process
The execution process begins with document drafting. Trust paperwork must clearly set forth the following elements:
- Purpose of the trust,
- Names of the settlor, trustee, and beneficiaries,
- All assets to be placed in the trust, and
- Instructions for asset management and distribution.
Nuncupative (oral) trusts are usually illegal. All trust documents must be written, usually in the same typeface and format, and signed, usually before a notary and/or witnesses.
We mentioned the second key stage in the trust execution process (corpus funding) above. Real estate must be deeded to the trust’s legal name, investment, bank, and other such accounts must be re-named, and a St. Petersburg estate planning lawyer must properly assign business interests or personal property.
Without proper and precise funding, the trust may not legally control those assets, and probate might still be required.
Finally, the trustee must formally assume all asset management responsibilities. These responsibilities usually include ancillary requirements, such as paying property or other taxes. In all these responsibilities, the trustee must:
- Act in the best interests of the beneficiaries,
- Follow the instructions in the trust document,
- Keep accurate records, and
- Distribute assets according to the terms of the trust.
Proper trust execution ensures that the four key goals of any trust (probate avoidance, privacy, settlor control, and protection of beneficiaries) are met. Poor or incomplete execution, such as failing to fund the trust or naming the wrong trustee, can result in legal complications, delays, or unintended consequences.
As always, working with an experienced estate planning attorney is key to ensuring proper trust execution and long-term success.
Contact a Diligent Pinellas County Lawyer
The essential estate planning process isn’t as complicated as many people believe it is. For a confidential consultation with an experienced estate planning lawyer in St. Petersburg, contact Drude Tomori Law. The sooner you reach out to us, the sooner we start working for you.
