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Is a lawyer necessary when dealing with a trust?

At some point in each person's life, establishing an estate plan becomes necessary. Whether this need occurs earlier in life or after retirement though, it often becomes clear after starting the estate planning process that it is no easy task. Oftentimes, when people come to this realization, they turn to a lawyer whose skill and expertise typically ensures that no mistakes will be made.

But because of the costs associated with such specialized help, many people have reservations about hiring an attorney to help with their estate plan. They oftentimes turn to do-it-yourself kits that provide a cost effective way to reach the same end. But as some of our Brevard County readers know, this may not be the best way to establish parts of an estate plan.

Let's take for example a trust fund. Common in many estate plans, trust funds typically provide a beneficiary with financial security through a variety of assets, such as cash, property or stocks and bonds. It's important to note though that there are several dozen types of trust funds, each providing for a beneficiary in different ways and all governed by different laws that may not be easily understood by all people.

On top of complex laws that dictate how a trust may be run and how funds can and will be distributed, there are also other complex laws that govern how such trusts will be taxed as well. Unfortunately, how much a trust will be taxed depends heavily on how each state's laws are written. In some states, taxes are assessed based on where the beneficiary lives. In other states, taxes are applied based on where the trust was created.

Because even small mistakes when establishing a trust can have huge consequences down the road, obtaining a lawyer when dealing with a trust may be not only necessary but beneficial as well. Using their knowledge of the law, you can make sure that you are complying with the law in order to ensure the security of the trust down the road.

Source:, "The Evolving Landscape of State Income Taxation of Trusts," James Cundiff and L. Timothy Halleron, Nov. 21, 2014

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