In this article, we will answer the following question: What are Common Types of Trusts and How Can They Help Me?
There are many types of trusts to consider, each designed to help achieve specific goals.
At Tombs Maxwell LLP, we are estate planning professionals who can help you determine which type (or types) of trust is most appropriate for you.
A living trust (also referred to an “inter vivos” trust) is a separate entity which holds legal title of property for the benefit of another person. With a living trust, the grantor – creator of the trust – generally benefits from the trust during his or her lifetime and then the trust distributes the property according to the trust instrument.
A trust, being a separate entity, does not go through the probate process. If the all of the grantors property is transferred into the trust, they can avoid probate because they will not have any property in their estate. A living trust can also help reduce a couple’s estate tax burden.
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Contingent Minor Trust
Most states require that the inheritance of an heir under the age of 18 must go into a trust. To fulfill that requirement and maintain control, it is usually best to incorporate a testamentary contingent minor trust in your will. A testamentary trust only comes into existence after your will has been probated.
Further, a testamentary contingent minor trust only comes into existence after your will has been probated and it is determined that the trust is necessary. Drafting a trust, rather than leaving it to the court, allows you retain control and ensure your intent is fulfilled. For example, if you wish, you can have the trust remain in existence until your youngest child turns the age of 25 instead of 18. In sum, we can generally draft a trust to meet your desires.
Other Types of Trusts
Trusts are useful in many situations such as planning for incapacity, controlling distribution of assets after death, and tax planning. What makes trusts unique are their versatility. At times trusts must restrictive, but trusts generally are only as restrictive as you imagination. For example, if you wish to provide income to children or others but fear the assets if given to them outright would be squandered, a trust can limit how the assets are spent and even protect those assets from creditors.
Trusts are flexible and come in many forms, such as irrevocable or revocable or inter vivos or testamentary. Common uses for other types of trusts include:
- tax saving strategies
- protect assets from creditors
- benefit charities
- preservation of assets
- managing of the assets for minors
If you have any questions about whether or not a trust would be helpful in your specific situation, give us a call. We’re here to help you.