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Setting up a living revocable or irrevocable trust

Massachusetts residents set up living trusts -- which is a trust created during the life of its creator -- for a variety of reasons. For instance, a revocable trust (changeable) or irrevocable trust (unchangeable) can be created to provide for loved ones who are too young or otherwise incapable of dealing with financial affairs on their own. Other people may set up a trust in order to protect their assets if they become incapacitated. Some trusts are created to avoid probate, stave off creditors and avoid hefty estate taxes.

Regardless of the reason, most living trusts are created in the same manner. They can be tailored for your purposes, so long as they are not contrary to public policy or illegal. This means that it is possible to control how and when distributions are made to a beneficiary -- who is the person receiving the assets of the trust -- by the trustee, the trust's administrator. During the life of the trust's creator, or grantor, he or she can serve as the grantor, trustee and beneficiary of the trust.

If the trust is revocable, it will become irrevocable upon death, and assets will then be distributed to the named beneficiaries in accordance with its terms. Some important provisions to add to any living trust are the appointment of an alternate trustee in case you become incapacitated or pass away, and a provision allowing for the removal of the trustee by the beneficiary or beneficiaries in case the trustee is not properly administering the trust. The trust must also be "funded," which means that assets are transferred into it, in order for it to be considered valid.

In order to be sure that your revocable or irrevocable trust will stand the test of time, you may require the assistance and advice of someone familiar with the process. The execution of a trust must meet legal standards set by the state of Massachusetts. Moreover, failing to include certain elements into the trust could also render it null and void.

Source: usa.gov, "Understanding Trusts", Dec. 14, 2014

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