Use of Revocable Living Trusts for Single Parents

Many younger, single parents often ignore the benefits of having a trust in their estate plan. That is due, I think, in large part, to a perception that maybe a younger person has little that needs protecting by using a trust. The considerations of having a trust if you are a single parent with minor children are significantly different than the considerations of your own parents. Your parents generally consider trusts for the purpose of eliminating probate court costs and related headaches. Another concern may be privacy, estate tax issues or a variety of other considerations.

The most common reason for anyone to set up a trust is to provide those that will care for your children and their finances a way of conveniently handling your children's continuing financial needs should you die prematurely.

Q.: What is a trust?
A.: A trust is an artificial legal entity akin to a corporation or partnership. A legal document creates the trust entity which is then funded with assets at the death of the creator of the trust (called a testamentary trust) or funded during the creator's lifetime (a living trust). A trust can be amended and revoked by the person creating the trust (the "grantor"). In the case of a living trust, the grantor keeps all the benefits of the property placed into the trust. The terms of the trust are established in a written agreement signed by the grantor and the trustee (sometimes analogous to the president of a corporation), and spell out what happens to the trust property both during the grantor's life and following his or her death. Frequently, the grantor serves as his or her own trustee during the grantor's lifetime.