Many attorneys recommend trusts to their clients, but not everyone needs a trust. Here are some questions and answers to help you decide if a trust might be useful in you situation.

• What's a trust?
• Is there an advantage in using a trust instead of a will?
• What are the disadvantages to using a trust?
• What's the difference between a revocable trust and an irrevocable trust?
• What is a living trust and how do they work?
• What is an AB trust?
• My father created an AB trust that allows his spouse to use the trust property until she dies. I am supposed to receive any remaining property. After my father's death, can his spouse, who isn't my mother, revoke the trust and disinherit me?
• Is there any way to contest a trust?
• Can a trust override a will?

What's a trust?

A trust is a legal agreement that names someone to hold property for the benefit of others. The trustee is the person or company that manages trust property and “beneficiaries” are the people who benefit from the trust. A living trust is a trust created while the property owner is alive and it is revocable for the lifetime of the trust maker. In contrast, a “testamentary trust” is one that takes effect when the trust maker dies. Some people use a will in addition to a trust to distribute their property.

Is there an advantage in using a trust instead of a will?

The main advantage to using a trust is that a trust helps to avoid probate. Probate is the court process though which assets are transferred and debts are paid off. The process can be very expensive and can take a long time.

There are some other advantages as well. They include:

• A trust has the ability to cover things that a will can't cover. Examples include retirement accounts, jointly owned property and life insurance policies.
• A will becomes public after the property owner dies. However, a trust stays private. Only the beneficiaries and the trustee are informed of the trust.
• A trust can be more flexible than a will. This helps those who have complicated relationships and need a complicated estate plan. For example, a husband in a second marriage might want his current wife to be able to live in their house before his interest passes to his children from his first marriage.
• A trust doesn't have to transfer all the property at once, instead in can transfer property over time. A parent could set up a trust to take care of the bills of an adult child with special needs without burdening their child with a lump payment. Similarly, parents of young children or young adults may want to provide payments monthly or yearly until the children become mature enough to handle their own money.
• Some trusts can be designed to reduce estate taxes. However, most estate taxes affect only the very rich.

What are the disadvantages to using a trust?

A trust may take longer to create than a will and can be more expensive. This is because trusts are usually more complicated than a basic will. However, in many situations, a trust can save money in the long run.

When you compare the cost of a will with the cost of a trust, also consider whether your estate will have to go through probate and look into how much that may cost. You may find that using a trust to avoid probate is well worth the cost of making a trust. You can do this research yourself using the internet and good self-help books, or an estate planning lawyer can walk you through both options.

What's the difference between a revocable trust and an irrevocable trust?

A revocable trust is one that can be modified or revoked at any time. This type of trust normally becomes irrevocable when the trust maker dies. An irrevocable trust cannot be changed

What is a living trust and how do they work?

A living trust is a common type of trust used to transfer trust property to beneficiaries without probate. After you make a living trust, you transfer property into the trust and you become the trust’s trustee. A living trust is revocable, so you can change it during your lifetime. After you die, the trust becomes irrevocable and your successor trustee distributes trust property to beneficiaries following the terms of the trust.

What is an AB trust?

An AB trust is like a living trust, but when the trust maker dies, an AB trust splits into two buckets: One bucket of property goes directly to beneficiaries, and property in the other bucket is set aside for use by another person before it passes on to the final beneficiaries. AB trusts are most often used as marital trusts, because they allow a surviving spouse to use the deceased spouse’s property before the property passes to deceased spouse’s children.

For many years, couples also used AB trusts avoid or reduce estate taxes. However, most couples no longer need to worry about estate taxes because married couples can leave more than $10 million dollars with no federal estate tax liability. That said, AB trusts can still be useful to couples with more modest estates in states that have estate taxes with lower exemption amounts.

My father created an AB trust that allows his spouse to use the trust property until she dies. I am supposed to receive any remaining property. After my father's death, can his spouse, who isn't my mother, revoke the trust and disinherit me?

After your father dies, the AB trust becomes irrevocable. The surviving spouse can't revoke the trust. Limits on what she can do with the property depend on the terms of the trust.

Is there any way to contest a trust?

A trust can be contested just like a will. A trust contest could be successful if the trust maker was mentally incompetent, forced, unduly influenced, or deceived when setting up the trust.

Can a trust override a will?

A trust can override a will in certain situations. For example, if you transfer your diamond ring into your living trust, technically the trust becomes the owner of the ring, not you. So if you use your will to leave the ring to you granddaughter, but you name your niece to get it through your trust, your trust would override your will because your trust, not you, owned the ring when you died. There are some exceptions to this general rule. See a lawyer if you have a specific question.