Learning the basic functions and terminology within Trusts can enable even a novice credit union staff member to provide seamless member service.
A “trust” is an estate planning tool. It is generally more complex than a primary estate plan because it involves the disposition of assets during different phases of the member’s life. Members will generally work with a professional estate planner or attorney to establish a formal trust to establish a trust agreement known simply as a “trust.” The trust agreement transfers assets the member owns (cash and/or property) to the trust by the member’s wishes. A trust might be established to allow beneficiaries of an estate to avoid the lengthy process of probate, or a member might create a trust as part of an overall financial plan.
First, determine the type of Trust.
Revocable Living Trust—The most common type of trust is a revocable living trust, which is established and operated during the Trustor’s lifetime. The trust may be amended or revoked by the trustor, but once the Trustor is deceased, it becomes irrevocable.
Irrevocable Living Trust—An irrevocable trust is designed so that it cannot be amended or revoked after creation. They may be created to accomplish a variety of estate planning techniques, including estate tax reduction, asset protection, and care for a disabled family member.
Second, learn the terminology used within a Trust.
Trustor – A Trustor owns the money or property placed within the trust. A Trustor might also be referred to as a Settlor or Grantor. Generally, all three refer to the same and may be used interchangeably depending on the attorney who has prepared the documents.
Trustee – The person or persons who manage the assets and distribution of the Trust. Sometimes, the Trustor and the Trustee will be the same person.
Successor Trustee – Many times, a Trustor will name a successor trustee in a trust. This person will only have authority once the trustee is unwilling or unable to complete their duties as trustee.
Beneficiary – The person or persons entitled to benefit from the money or property held within the Trust once the Trustor dies.
Finally, become familiar with member membership requirements.
For federal credit unions, the Trustee must be eligible for membership in a Revocable Living Trust. If your credit union permits Irrevocable Living Trusts, the Trustee or the beneficiary must be a member.
