What Does a Trust Attorney Do?

When planning for the future, particularly for the protection and distribution of your assets, a trust can be one of the most effective tools available. However, setting up and managing a trust isn’t a simple task. That’s where a trust attorney comes in. But what exactly does a trust attorney do, and why is their role so critical to the success of your estate plan? In this article, we’ll break down the responsibilities of a trust attorney and why working with one can make all the difference in ensuring your assets are protected and your wishes are honored.

Drafting and Structuring Trust Documents

One of the primary responsibilities of a trust attorney is to draft the legal documents required to establish a trust. Creating a trust isn’t as simple as filling out a form; the document must be carefully structured to reflect the grantor’s (the person establishing the trust) specific wishes while complying with state and federal laws. A trust attorney works closely with you to understand your objectives—whether it’s providing for your children, minimizing taxes, or protecting assets from creditors—and drafts a document that addresses your unique situation.

Additionally, a trust attorney ensures that the trust aligns with your overall estate plan. For example, they’ll consider how the trust interacts with your will, powers of attorney, and any other legal instruments you may have in place. A poorly drafted trust can lead to unintended consequences, so having a knowledgeable attorney draft the trust ensures that it’s legally sound and operates as you intend.

Helping You Choose the Right Type of Trust

Not all trusts are the same, and one of the key roles of a trust attorney is to advise you on which type of trust best suits your needs. There are revocable trusts, irrevocable trusts, special needs trusts, charitable trusts, and more. Each type of trust serves a different purpose and comes with its own set of advantages and disadvantages.

A trust attorney will take the time to explain the differences between these types of trusts and recommend the best option for your financial and family situation. For example, if your primary goal is to maintain control of your assets during your lifetime while avoiding probate, a revocable living trust might be ideal. On the other hand, if asset protection from creditors is your top concern, an irrevocable trust may be the better choice. The attorney’s job is to match your objectives with the right legal tool, ensuring that your assets are protected in the way that makes the most sense for you.

Funding the Trust

A common mistake people make after setting up a trust is failing to transfer their assets into it. This process, known as “funding the trust,” is a crucial step, and it’s something a trust attorney will guide you through. If your trust is not properly funded, the assets you intend to protect may still be subject to probate or creditor claims, effectively defeating the purpose of creating the trust in the first place.

A trust attorney will help you retitle assets, such as real estate, bank accounts, and investments, so they are legally owned by the trust. They’ll also advise on how to handle more complex assets like business interests or intellectual property. Properly funding your trust ensures that the trust will operate effectively, protecting your assets according to your wishes.

Advising Trustees and Beneficiaries

Once a trust is established, the role of a trust attorney doesn’t end there. They often provide ongoing advice to both trustees (the individuals or institutions responsible for managing the trust) and beneficiaries (those who will receive assets from the trust). For trustees, a trust attorney is an essential resource for understanding their fiduciary responsibilities and ensuring that they manage the trust in accordance with both the trust document and applicable laws.

Trustees may need to make decisions about distributing assets, investing trust funds, or filing tax returns, and a trust attorney can provide legal guidance in these areas. For beneficiaries, a trust attorney can clarify their rights under the trust and assist if any disputes arise with the trustee.

Handling Trust Modifications or Termination

Over time, your financial situation or family dynamics may change, necessitating updates to your trust. A trust attorney can assist in modifying the trust to reflect these changes. For example, you may want to add a new beneficiary, remove an existing one, or change the trustee. In the case of a revocable trust, modifications are generally straightforward, as the grantor retains the power to make changes during their lifetime.

For irrevocable trusts, modifications are more complicated, but in some cases, they can still be made through legal mechanisms such as a trust reformation or decanting. A trust attorney can guide you through these processes, ensuring that any changes comply with the law and that your intentions remain clear.

Sometimes, it may be necessary to terminate the trust altogether, either because it has fulfilled its purpose or because it no longer serves your needs. A trust attorney will help you navigate the legal requirements for terminating a trust and distributing its assets, ensuring that the process is carried out correctly.

Tax Planning and Compliance

Trusts often come with tax implications that need to be carefully considered. Depending on the type of trust, the assets within it, and how distributions are made, a trust may be subject to income taxes, estate taxes, or gift taxes. A trust attorney works closely with tax professionals to ensure that the trust is structured in a way that minimizes tax liabilities.

Trusts can be taxed at high rates if not properly managed, so a trust attorney will help you stay compliant with federal and state tax laws, avoiding unnecessary tax burdens. They can also assist with filing the necessary tax returns for the trust, ensuring that everything is done correctly and on time.

Resolving Disputes

Unfortunately, disputes can arise over the terms of a trust or its administration. Beneficiaries may feel that they are not receiving their fair share, or there may be disagreements over how the trust is being managed. A trust attorney is experienced in handling these types of conflicts and can mediate between parties to resolve disputes without going to court.

If litigation is necessary, a trust attorney will represent the interests of the trust, the trustee, or the beneficiaries, depending on the situation. Their role is to protect the integrity of the trust and ensure that its terms are followed as intended.

Conclusion

A trust attorney plays a vital role in creating, managing, and ongoing administration of trusts. From drafting the initial documents to guiding trustees and beneficiaries through complex legal issues, a trust attorney ensures that your trust operates smoothly and in line with your wishes. Whether you’re setting up a simple revocable trust or dealing with the complexities of an irrevocable trust, working with an experienced trust attorney is key to a successful estate plan.

About the Author

Gideon Alper is an attorney who specializes in asset protection planning. He graduated with honors from Emory University Law School and has been practicing law for almost 15 years.

Gideon and the Alper Law firm have advised thousands of clients about how to protect their assets from creditors.