Check Trust Name Availability: Everything You Need to Know
Checking name trust availability is an easy process that requires only a few small steps.3 min read
2. What Is a Beneficiary's Right to Action?
3. Revocable vs. Irrevocable Trusts
Updated November 3, 2020:
Checking name trust availability is an easy process that requires only a few small steps. Trusts can be broken down into two main categories:
- Living trusts: Living trusts are created by an individual at some point in his or her lifetime. The grantor is the person who transfers the property into a trust, and the trustees are the beneficiaries of the trust. Probate can be avoided with these kinds of trusts, since the assets are held by the trust and not in the name of an individual. The grantor may act as the trustee or may appoint another party or advisor to manage the trust.
- Testamentary trusts: In a testamentary trust, the trust becomes established when the person whose assets are represented dies. These trusts can be set up for a number of reasons, including providing for future beneficiaries.
In both situations, it is vital for the person in charge of administering the trust to maintain honesty and integrity and to abide by the terms of the trust exactly. If the duty of the person administering the trust is breached, then the beneficiaries of the trust have the right to protect themselves through legal action.
What Is the Role of a Trustee?
In order to manage a trust properly and ensure that all regulatory requirements are being met, a trustee is obliged to perform a wide variety of tasks. Some of the roles and responsibilities of a trustee include:
- Protection and collection of assets of the trust: These are the two main responsibilities of a trustee. For example, when property is one of the assets involved, the trustee is responsible for the maintenance and upkeep of the property as well as making sure that the property insurance is up-to-date. If the assets are cash or securities, the trustee must maintain the separate accounts on behalf of beneficiaries of the trust.
- Keeping up with taxes: The trustee has the responsibility of maintaining all the tax liability that occurs with a trust account. They must also pay all tax liability on the capital gains as well as undistributed income. The trustee will also be required to notify the beneficiaries of the amounts that they are required to include on their personal tax returns.
- Maintaining all records: The trustee has the responsibility of documenting all of the transactions that occur within a trust. Before the final settlement of the trust, the trustee must provide documentation that all of the income and assets associated with the trust account have been distributed and administered properly.
- Investment oversight: A trustee is supposed to plan for both the future and current needs of the beneficiaries. This can involve maintaining investments in the trust that will provide income to the beneficiaries and reinvesting the principal. There are some instances where the trustee will have the ability to distribute principal to the beneficiaries.
What Is a Beneficiary's Right to Action?
A beneficiary has the right to see the accounting of the assets as well as to request a special accounting if they feel that the trustee has not been performing their role and fulfilling their responsibilities. If a trustee does not provide a beneficiary with the documentation that they request, then the beneficiary has the right to take legal action against the trustee. This can include removing or replacing the trustee. Such an action is normally handled in probate court.
Revocable vs. Irrevocable Trusts
Living trusts can be structured as revocable or irrevocable trusts:
- Revocable: With these types of trusts, the property held in the trust can be revoked at any time. They do not need to be filed with the probate office in the event of a death and are often chosen in order to maintain family privacy. While it does not have to go through probate, the property will be subject to estate and income tax, like any owned property.
- Irrevocable: In this type of trust, the assets placed are removed permanently from the estate of the grantor. Capital gains and taxes are paid from the trust, though in the event of the grantor's death, the assets will not be subject to estate taxes.
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