Will I Lose Control of My Property if I Create an Ohio Living Trust?
A living trust offers many benefits for those seeking a more efficient and more private way to pass property upon death. However, many people who have no direct experience of trusts associate them with wealthy television characters and “trust fund kids” who don’t have to work for a living. Those tales of people waiting for a particular age or landmark to gain control of their trusts or arguing with trustees who refuse to cover certain expenses create an impression that trusts are complicated and limiting.
Of course, there are intricate trusts, and there are trusts that are designed to be limiting. But, only if that’s what the grantor (creator) chooses. Someone who places his or her property in an Ohio living trust for purposes of succession planning retains full control over that property during his or her lifetime—and is free to use that property however he or she chooses.
How an Ohio Living Trust Works
A trust involves three parties: a grantor / creator, a trustee, and one or more beneficiaries. The grantor is the person or entity that creates and funds the trust. The trustee is responsible for managing trust assets for the benefit of the beneficiaries. And, the beneficiaries—as the name suggests—are the people or entities that benefit from the trust assets.
When a typical Ohio living trust that is created for estate planning purposes, the grantor plays all three roles. In short, he puts his property into the trust, then acts as trustee to manage that property for his own benefit. During his lifetime, the grantor is free to do as he pleases with trust assets, since he is managing them exclusively for his own benefit. In practical terms, there is little or no difference in the way the grantor-beneficiary uses and disposes of property. The main difference is a legal technicality: property is titled to the trust rather than to the grantor directly.
The checking account is now in the name of the trust, but the grantor-beneficiary, as trustee, holds the checkbook and is free to write a check for a trip to the Bahamas, a large charitable donation, or 1,000 doughnuts if he chooses. He is also free to buy and sell property. He can even opt to terminate the trust and take back his property.
Passing Assets through an Ohio Living Trust
Having property in a living trust has little or no impact on the grantor’s use or enjoyment of property during his lifetime. When the grantor passes away, trustee duties pass to the successor trustee appointed by the grantor. The trust will also include provision for successor beneficiaries.
In simple terms, the successor trustee takes over management of the trust assets and manages them for the benefit of the successor beneficiaries. How those assets are managed and distributed depends on the terms created by the grantor. So, if he or she wanted to use the trust simply to pass property directly to beneficiaries, then the trustee will pay any debts and other required expenses and then distribute the remaining assets to beneficiaries and dissolve the trust. In other cases, the grantor will want greater control of how trust assets are expended, and so the trustee will continue to manage those assets in accordance with the terms of the trust document. This may include paying certain types of expenses on behalf of beneficiaries, paying out certain sums at pre-determined intervals, or paying out a percentage of assets or earnings on a regular basis.
In short, creation of a living trust gives the grantor control over how assets are managed and distributed—during his lifetime and beyond.
An experienced estate planning attorney like the ones at Dworken & Bernstein can provide further information and explain the differences between a will and a living trust. You can schedule your free consultation right now by calling 440-946-7656 or filling out the contact form on this site.