by Susan Spann
Last month’s guest post here at Writers in the Storm took a look at wills in author estate plans. Today, we’ll look at the other common estate planning device: the trust.
A trust is a legal entity (a “fictitious person”) created by a trust agreement. Its purpose is to hold and manage property during the owner’s life and to distribute that property after the owner’s death.
The person who owns the property and establishes the trust is called the “Settlor.” That’s you, the author, for purposes of this discussion. The settlor can put as much (or as little) of his or her property into the trust as (s)he chooses, but anything not put into the trust will pass by will (or by law, if there is no will), and often that means a probate.
However, property in a trust usually bypasses probate, which means that if enough your property is placed in a trust, your heirs may not have to probate your estate at all. That means a shorter administration period and lower costs.
Trusts allow for greater flexibility in distribution of an author’s assets after death, including intellectual property rights like copyright.
Unlike a will, which can often be written without the assistance of counsel, trusts almost always require an attorney’s aid. However, the extra cost of drafting a trust is usually more than offset by the savings on probate costs.
Most people (authors included) will create a revocable trust, a type of trust which can be altered or terminated during the lifetime of the person who created it. This allows for greater flexibility, and also enables the author to change beneficiaries and named trustees at will or as the settlor’s needs change.
Trusts are administered by a “Trustee.” During the settlor/author’s life, the settlor normally serves as his or her own trustee. The trust agreement states who will serve as trustee after the settlor’s death, and usually names at least one “successor trustee” who will serve if the named trustee dies first or refuses to serve as trustee when the time comes. Like all other provisions of a revocable trust, this can be changed during the settlor’s lifetime, but only if the settlor chooses to do so.
While trusts are often the most flexible way to hold and administer copyrights upon an author’s death, estate planning is a personal process and each author needs to investigate all the options to find the one which best suits the author’s individual needs.
Revocable trusts are not the only kind (though they are the most common). Consult an attorney to make sure you have the type that works for you. Also, consult your accountant, because some trusts receive different tax treatment or require the filing of special tax forms.
Thank you for joining me for today’s discussion of trusts as estate planning vehicles. Next month, we’ll look at how authors should choose the successor trustee or executor who will manage the literary estate after the author’s death.
Have you got a trust? A will? Are you just starting the estate planning process? Have questions? Hop into the comments: I’d love to hear from you.
Susan Spann is a publishing attorney and author from Sacramento, California. Her debut mystery novel, CLAWS OF THE CAT (Thomas Dunne Books, July 2013), is the first in a series featuring ninja detective Hiro Hattori. Susan blogs about writing, publishing law and seahorses at http://www.SusanSpann.com. Find her on Twitter @SusanSpann or on Facebook.