Connecticut Trust Laws: Explained

If you are a Connecticut resident, there’s a good chance you have heard of the term “trust.” But what is a trust? What does it do? How can it help me? This blog post will answer all of those questions and more.

We will explain what trusts are under Connecticut law, the different types of trusts available, and how they can benefit you. So if you’re curious about trusts and want to learn more, keep reading.

What’s A Trust?

A trust is a legal arrangement in which one person (the trustee) holds the property on behalf of another person (the beneficiary). The trustee has a legal duty to manage the trust property for the beneficiary’s benefit. Trusts can be created for a variety of purposes, including:

  • To provide for the care of minor children or disabled adults.
  • To manage property during someone’s lifetime.
  • To reduce estate taxes.
  • To direct how assets will be distributed after someone’s death.

How Are Trusts Established?

A settlor creates a trust, which transfers property to a trustee. The trustee holds and manages the property for the benefit of one or more beneficiaries. The terms of the trust are outlined in a written document called the trust agreement.

Types Of Trusts

There are three main types of trusts: testamentary trusts, living trusts, and charitable trusts.

Testamentary Trusts:  A testamentary trust is created by a will and becomes effective upon the settlor’s death. The trustee manages the property to benefit the beneficiaries named in the will.

Living Trusts: A living trust, also known as an inter vivos trust, is created during the settlor’s lifetime. The trustee manages the property to benefit the beneficiaries named in the trust agreement.

Charitable Trusts: A charitable trust is created for a charitable purpose, such as providing support for a church or other religious organization, supporting educational institutions, or promoting medical research. The trustee manages the property to benefit the charity named in the trust agreement.

Other Types of Trusts

Other types of trusts are important to figure out which one might work best for your situation. These include:

An irrevocable trust: This is a trust that cannot be revoked or amended by the settlor. Once the property has been transferred to an irrevocable trust, it is removed from the settlor’s estate. It is not subject to probate upon the death of the settlor.

A spendthrift trust: This is an irrevocable trust for the benefit of a spendthrift beneficiary, such as a child or grandchild, who cannot control their spending. The trustee manages the property to benefit the spendthrift beneficiary and pays the beneficiary only as much as the trustee decides necessary for the beneficiary’s support.

Are Living Wills The Same As Living Trusts?

No. A living will is a document that states your wishes regarding medical treatment if you become unable to communicate your decisions. A living trust is a legal arrangement in which you transfer ownership of your property to a trustee who manages the property for the benefit of the beneficiaries named in the trust agreement.

Can A Trust Be Created For Any Purpose?

Yes, a trust can be created for any lawful purpose. The most common purposes are to provide for the support of a family, manage property for young children, care for pets, and provide support for a charity.

What Is A Trustee’s Fiduciary Duty?

A trustee has a fiduciary duty to the beneficiaries of the trust. This duty requires the trustee to act in good faith and the best interests of the beneficiaries. The trustee must also exercise reasonable care and diligence in managing the trust property.

What Rights Does A Beneficiary Have?

A beneficiary has a right to information about the trust and its administration. The beneficiary also has a right to an accounting of the trust property and receipts and disbursements by the trustee.

Trusts In Connecticut

Connecticut law recognizes two main types of trusts: express trusts and resulting trusts.

Express Trusts

An express trust is created when the settlor intentionally transfers property to the trustee to create a trust. For example, if you give your house to your child with the intention of them living there, that would be an express trust. 

Resulting Trusts

A resulting trust is created when the settlor unintentionally transfers property to the trustee. For example, if you give your house to your child, but they do not want it, a resulting trust may be created.

Creating Trusts

There are many other types of trusts that can be created under Connecticut law. The type of trust that is right for you will depend on your specific circumstances and objectives. To create a trust in Connecticut, the settler must have the legal capacity to do so. This means that they must be of sound mind and over the age of 18. The settlor must also have a valid reason for creating the trust.

There are several ways to create a trust in Connecticut. The most common is by will. However, trusts can also be created during life or through a deed. If you are considering creating a trust, it is important to consult with an experienced attorney who can help you navigate the process and ensure that your interests are protected.

Connecticut Trust Law Changes

In 2020, Connecticut enacted legislation that completely overhauled the state’s trust laws and went into effect on January 1. The Connecticut Uniform Trust Code (CUTC) is in charge of creating, managing, and ending many trusts. Some of the rules established by the CUTC can be changed in specific circumstances, although there are ones that cannot be changed and must be followed as-is.

The CUTC is made up of four parts, these are:

  • The Uniform Trust Code
  • The Expanded Rule Against Perpetuities
  • The Uniform Directed Trust Act
  • The Qualified Dispositions in Trust Act

Each part has changed due to the new legislation. Understanding how these changes may affect trusts already created or are currently being managed is important.

Some of the major changes that have been made are as follows:

The Uniform Trust Code

The biggest change to the uniform trust code is that it is now subject to the mandatory notice provision. This means that any beneficiary over the age of 25 must be notified of all details regarding the trust, such as its existence, the name of trustees, and request any additional information. This big change makes it so people will have to evaluate who they name as beneficiaries carefully. They will all have access to all the information.

Changing or Terminating Irrevocable Trusts

The new law broadens the ability of courts to modify or terminate trusts in Connecticut. There are five ways to modify existing trusts under this new statute, including changed circumstances, beneficiary consent, correction of errors, tax considerations, and the creator’s and all beneficiaries’ consent. In most situations, there would be a probate court proceeding to implement the change or termination of the trust.

Directed Trust Act

The Uniform Directed Trust Act is also part of the new Connecticut Uniform Trust Code. A directed trust, which is a type of new trust, can be created under this legislation. The creator of a directed trust may delegate trustee powers to various people with the aid of this legislation.

A trustee, for example, might be tasked with monitoring the investments of a trust, and another individual could be assigned to manage payouts to beneficiaries. This can be especially useful when the trust’s assets include non-marketable securities such as a closely held firm or real estate.

Qualified Dispositions in Trust Act

The Connecticut Domestic Asset Protection Trust (DAPT) is a new type of trust that has been established as a result of this legislation. A DAPT allows the trust creator to move their assets into the trust and become a beneficiary while also protected from the creditors. There are several benefits to using DAPTs, but they come with their own regulations.

Dynasty Trusts

Before the passage of this legislation, the duration of a trust was limited to around 90-120 years, resulting in the termination of a trust after only a few generations. A Connecticut trust may now exist for up to 800 years before it must terminate, as long as it is established after January 1, 2020.

Non-Judicial Settlements

The bill, as passed, allows interested parties to enter into a legally enforceable non-judicial settlement agreement in matters relating to trusts, such as interpretation of the trust agreement, trustee resignation and appointment, trust accountings, and trustee compensation. This will allow parties to resolve issues concerning the trust using less hassle and expense than litigation.

Start Your Estate Planning In Connecticut

Estate planning is vital for anyone that wants to ensure their family is taken care of after they’re gone. One key element in estate planning is creating a trust. That’s why our experts at the Disability and Estate Planning Partners of Nesso Group, LLC can help you create a trust that meets your specific needs and goals.

At Nesso Group, we can help you determine whether a trust is right for you and can assist you in creating a trust that meets your unique needs. Trusts are complex legal documents, so it’s important to have the help of our experienced professionals on your side to help you navigate the process. Don’t hesitate to reach out to our Nesso Law team to get started now.



All information herein has been prepared solely for informational purposes. Opinions expressed by the owner of the attached content does not reflect an endorsement by the named broker dealer or its affiliates. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.  Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.

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