What is a trust?
A trust is legal device used to hold and manage money and property for one or more persons. The person who creates a trust is called the settlor or the grantor. You can set up a revocable living trust to manage your money and property for your benefit during your lifetime and to distribute your money and property after you die. You can also set up a trust (called a testamentary trust) in your will. A testamentary trust might be for minor children, for a disabled beneficiary, or for tax planning or charitable purposes.
Who will be the trustee?
The trustee is the person named in the trust agreement (for a trust set up during the settlor's lifetime) or in the settlor's will (for a testamentary trust). The settlor of a revocable living trust usually names himself or herself as the first trustee and names one or more successor trustees to take over the administration of the trust after the settlor dies or if the settlor becomes incapable of administering the trust. The settlor may name a family member, friend, bank, or trust company as the initial trustee or as a successor trustee of a revocable living trust or a testamentary trust.
What powers and duties does a trustee have?
Unless limited by the terms of the trust, the trustee has the powers listed in the Oregon trust code. The statutory powers include the authority to open bank accounts; invest and reinvest trust assets; buy, sell, lease, and repair trust property; pay bills and taxes; and pay reasonable compensation to the trustee and to the attorneys and accountants who advise or assist the trustee. The trustee's primary duty is to carry out the instructions of the settlor as written in the trust. The trustee's other duties include taking charge of the money and property that is in the trust, keeping good accounting records of the trust assets, managing the trust assets for the benefit of the beneficiaries of the trust; and providing certain information to the beneficiaries of the trust.
Is the court involved in trust administration?
If a revocable living trust is drafted and funded properly, probate is not necessary. Probate may be necessary if the settlor owns assets that are not in the trust when he or she dies. If the trust is created in a will, the trust is generally funded as part of the probate process. However, the court is not usually involved in the administration of a trust. In certain situations, a trustee or a beneficiary may file a petition asking the court to take action to resolve issues concerning a trust.
When does a trust end?
The trust continues as long as there are assets in the trust. If a revocable living trust directs the trustee to distribute the assets at the death of the settlor, the trustee can terminate the trust after the debts and taxes have been paid and the distributions to the beneficiaries have been made. The terms of a trust for the settlor's children may instruct the trustee to keep the trust open for the rest of the children's lives or to distribute the assets when the youngest child reaches a specific age. A trust for a charitable organization may continue operating indefinitely.
How much does trust administration cost?
The trust administration process for a revocable living trust after the settlor dies is generally simpler and less expensive than a probate. There are no filing fees and no paperwork has to be filed with the court. Most trusts allow a trustee to pay himself or herself reasonable compensation for serving as the trustee, and to pay for the reasonable fees of the attorneys and accountants who advise and assist the trustee. If the trust administration continues over a period of years, there will be additional expenses for taxes and trustee compensation as well as more legal and accounting fees.