Wills are a common estate planning tool with which most people have some degree of familiarity. Trusts, on the other hand, might not be as well known, but an Ohio resident meeting with an estate planning attorney should have some knowledge of them because they can play an important role in an estate plan.
The person who creates a trust is the settlor. Settlors are responsible for having trust documents prepared and signed. Once the trust is set up, it is the settlor’s job to fund the trust by transferring money and other assets into it. The role played by the settlor of a trust after its creation depends upon the type of trust that has been set up.
The settlor of an irrevocable trust does not have the ability to amend or alter its terms once it has been created. The trustee has the responsibility for managing the trust in accordance with its terms as reflected in the original trust agreement that established it. Although the settlor does not retain the right to amend, revoke or alter the terms of an irrevocable trust, it is the settlor’s wishes as reflected in the trust agreement that guide the management of the trust.
Revocable trusts provide more of an opportunity for a settlor to assert more control over the management of a trust. Settlors of revocable trusts retain the power to alter the terms of the trust agreement or to cancel the trust. A revocable trust, which is commonly referred to as a living trust, often has the settlor taking on the role of the trustee.
Deciding whether a revocable trust or an irrevocable trust is best suited for managing an individual’s wealth and for asset protection depends upon the unique needs and wishes of the settlor. An estate planning attorney might be the best source for guidance in determining the elements appropriate to a particular estate plan.