A trust agreement is a legal document that outlines the terms and conditions of a trust relationship. It can be used to protect both personal and business assets. In this article, we will discuss what it is, and why you may need one.
What is a Trust Agreement?
A trust agreement is a legal document that creates one or more trusts. The two basic parties to a trust agreement are the grantor and the trustee. The grantor is the person who creates the trust agreement. The trustee is the person or entity who manages and distributes the assets in the trust. In addition, every trust has a beneficiary, which is a person or charity that benefits from the trust. Beneficiaries, however, are not parties to the trust agreement; they are mentioned in the trust agreement, but they do not sign it. Some trusts will include other parties, like investment advisors, distribution advisors, and trust protectors, to name a few. Those roles are beyond the scope of this article, which is meant to provide a basic overview.
What is the Purpose of a Trust Agreement?
The purpose of a trust agreement is to establish one or more trusts. Trusts serve a wide variety of purposes, including passing assets on to future generations, protecting assets from creditors, saving taxes, managing wealth, and ensuring that assets are distributed according to the grantor’s wishes even after the grantor’s death.
What are the Disadvantages?
While trusts have many benefits, there are also some disadvantages to consider. Here are a few of the most important ones:
1. Cost – Trusts can be expensive to set up and maintain. There are often legal fees associated with creating and maintaining a trust. One of Valur’s goals is to reduce those costs as much as possible. Valur allows you to set up trusts for free; we only charge for administering trusts, not for the initial set-up. Valur’s goal is to be as affordable as possible.
2. Complexity – Trusts can be difficult to understand and navigate. One of the goals of Learn Valur is to make trusts more accessible and comprehensible to the general public.
3. Hard to Change – It can be difficult to make changes once you’ve set up the trust agreement. If you decide you want to change the terms of the agreement, you may need to engage an attorney to do so.
4. Limited Control – The trustee has a lot of control over the assets in the trust. You may not have as much control over how the money is used as you would like. Depending on the type of trust you’re creating, your control over the trust may be limited by certain tax rules.
How to Set Up a Trust Agreement
Creating a trust agreement is not as difficult as it may seem. In most cases, you can create one by using a standard legal form and by filling in the relevant information. You can also set up many types of trusts by creating an account on Valur’s website and answering a brief questionnaire. You can also go to an attorney and have the attorney draft the trust for you.
Certificate of Trust vs. Trust Agreements: Why are They Different?
These two terms get confused a lot, and it’s worth understanding their differences. A certificate of trust is a document that provides evidence of the existence of a trust. It is not a trust agreement, and it does not set out the terms and conditions of the trust relationship.
In contrast, a trust agreement is a legal document that outlines the specific terms and conditions of a trust relationship. It is used to protect assets, avoid taxes, and transfer assets.
Next Steps
A trust agreement is the document that will help you set up the specific terms and conditions of a trust relationship. It’ll protect your assets, make transferring assets easy, and save on taxes. If you’re considering setting up a trust agreement, it’s important to understand all of the potential advantages and disadvantages. By taking into account both sides of this decision, you can be sure that you’re making an informed choice about how to best to achieve your specific objectives.
About Valur
We’ve built a platform to give everyone access to the tax and wealth-building tools typically reserved for wealthy individuals with a team of accountants and lawyers. We make it simple and seamless for our customers to take advantage of these hard-to-access tax-advantaged structures. With Valur, you can build your wealth more efficiently at less than half the cost of competitors.
From picking the best strategy to taking care of all the setup and ongoing overhead, we make things simple. The results are real: We have helped create more than $3 billion in additional wealth for our customers. If you would like to learn more, please feel free to explore our Learning Center. You can also see your potential tax savings with our online calculators or schedule a time to chat with us!
