An Increasingly Popular Alternative Disposition Plan
Trusts have become increasingly attractive options in Alabama over the past few decades, allowing clients to dispose of their property with greater flexibility and control of the process while not requiring the rigid formalities of the probate system. So what is a trust? Essentially, a trust is a relationship. A person who creates a trust selects a beneficiary who will receive the trust property, and a trustee who will be in charge of holding that property until it is time to distribute. Trusts allow clients to provide their families or other beneficiaries with a stream of income over a period of many years, instead of a lump sum payment. Trusts also have important tax advantages and avoid the entire probate process – often a trip to the bank is all that is required for beneficiaries. When someone accepts appointment as a trustee, they inherit fiduciary duties of care and loyalty, which will be enforced by the court if self-dealing or fund mismanagement is claimed by a beneficiary. Our Alabama Trust attorneys can help you create the appropriate trust for your particular situation, or help you reclaim what is yours if you believe a trustee is mismanaging your funds.
There exist three requirements that a trust must meet in order to be effective in the courts. First, whoever creates the trust must have the present intent to create the trust. This just means you cannot transfer property to a trust that is to be set up at a future date; you don’t need any magic words to create a trust. Second, the trust must contain some sort of property. Basically, you can’t create an empty trust – there has to be something in it, whether that be money, real estate, a baseball card collection, and so forth. Finally, there has to be a beneficiary. Without a beneficiary, the trust won’t work, since there is no one to enforce the trust. It is not essential for there to be a trustee; the court can appoint a trustee if the trust document fails to do so.
There are two basic forms that trusts can take: inter vivos trusts and testamentary trusts. An inter vivos trust is a trust that the grantor (person creating the trust) creates which operates during the grantor’s lifetime. A testamentary trust, on the other hand, is a trust that takes effect upon the grantor’s death. Often a will governs a testamentary trust by determining which property will fund the trust. Inter vivos trusts are revocable, but testamentary trusts become irrevocable upon the death of the grantor.
Trusts can be used to meet clients’ needs in many ways, and can range from simple will-like documents to highly specialized and complex instruments. The Dothan probate attorneys of Parkman White, LLP are experts at trust creation and maintenance, and will be happy to help you set up an estate plan that uniquely fits your needs. Whether you live in Dothan, Ozark, Enterprise, Ft. Rucker, Eufaula, or anywhere in Southeast Alabama, let our Dothan legal team work for you. Email us or call us today at 334-792-1900 for a consultation and let us put our experience to work for you.