What You Need to Know about Trusts

Understanding the Steps and the Role of Asset Protection

Trusts are powerful tools used to manage and protect your assets—both during your lifetime and after you’re gone. They can help you avoid probate, minimize conflict, and ensure your legacy is passed on according to your values.

If you’re searching for asset protection planning near me, understanding how a trust is created is the first step toward securing your financial future.

What Is a Trust?

A trust is a legal arrangement that allows someone (called the grantor) to transfer ownership of their assets to a trustee, who then manages those assets for the benefit of one or more beneficiaries. Trusts can take effect during your lifetime (living trusts) or after death (testamentary trusts), and they come with customizable terms to meet your family’s needs.

Why Use a Trust for Asset Protection?

Trusts offer far more control than simply passing down assets through a will. For example, you can:

• Delay distributions until beneficiaries reach a certain age
• Set conditions based on life milestones (education, employment, recovery from addiction, etc.)
• Keep assets out of probate and shield them from public view
• Limit the ability of creditors or ex-spouses to access an inheritance

At McCammon Law, P.C., we help families throughout Boerne create trusts as part of broader asset protection planning strategies to safeguard everything they’ve worked so hard to build. Read more in our article, What Type of Trust Should Young Families Have?

Step-by-Step: How Is a Trust Created?

Step 1: Choose the Right Assets to Place in the Trust

The first step is identifying what you want the trust to hold. Common trust assets include:

• Cash or bank accounts
• Real estate and land
• Stocks and bonds
• Business interests
• Valuable personal property

These assets must be legally transferred into the trust for it to be effective. This is called funding the trust.

Step 2: Identify Your Beneficiaries

Next, determine who will benefit from the trust, known as the beneficiaries. This could be family members, friends, or charitable organizations.

Step 3: Determine the Rules of Your Trust

The grantor also sets the trust rules for how assets should be distributed or given to the beneficiaries. Funds could be designed for educational purposes, as a steady income, or as a lump sum upon reaching a certain age.

Step 4: Select Your Trustee or Trust Manager

The trustee's job involves managing the trust's assets to a high level of responsibility and dedication, called fiduciary duties. They ensure that all distributions to beneficiaries are made according to the trust rules, and fund management may last several years. The grantor can choose a trusted individual or a professional institution to serve as trustee.

Step 5: Drafting and Funding the Trust with an Estate Attorney

Create your trust by drafting a legal document with an estate planning attorney. Lastly, the grantor must fund the trust or transfer ownership of all assets, known as the principal, that the trust will manage. Assets must be placed in the trust for the trust to have legal authority over them.

Trusts and Asset Protection Go Hand in Hand

Trusts are a vital part of any asset protection planning near me search. Unlike wills, which become public in probate, trusts remain private. This helps protect your loved ones from:

• Unwanted attention from creditors
• Public exposure of family finances
• Probate delays and expenses

By putting your assets into a trust, you're not only planning for what happens when you're gone—you're protecting yourself and your family during your lifetime, too.

Ready to Create a Trust That Works for You?

If you’re considering a trust or looking for asset protection planning near me in Boerne, we’re here to help. Request a consultation with McCammon Law, P.C. where we make estate planning understandable and approachable, so you can move forward with confidence.

Trust Terms Definitions

• Beneficiary: Individuals or entities named by the grantor to inherit the assets in the trust.
• Fiduciary: Someone obligated to act in the best interest of another, such as a trustee for a beneficiary.
• Funding: The act of transferring assets into the trust is essential for its effectiveness.
• Grantor: The person who establishes a trust. They are also known as the settlor or trustor.
• Distributions: Making payments or giving property from the trust to the beneficiaries as outlined in the trust's terms. Depending on the trust's rules, this can include periodic payouts, lump-sum disbursements, or specific allocations of property.
• Principal: The original assets placed into the trust, excluding any earnings like interest or dividends.
• Trust: A legal document that outlines how your assets should be managed during your lifetime and after your death.
• Trust Administrator: A professional responsible for overseeing a trust managed by a financial institution.
• Trustee: The organization or person tasked with managing the trust.

Understanding these terms and the steps to creating a trust can empower you to make informed decisions about your estate. Consult with an experienced estate planning professional to help you navigate these processes and establish a trust that aligns with your wishes and efficiently provides for your beneficiaries.

References: U.S. Bank "Trust Terms You Need to Know" and American Bar Association "Glossary of Estate Planning Terms: Estate Planning Information & FAQs"