TRUSTS
TRUSTS are an important aspect of estate planning.
Trusts are flexible and useful vehicles that are beneficial for many reasons, including tax planning, estate planning and for charitable giving. A trust can help avoid probate (and the associated probate fees, legal fees and privacy concerns, unnecessary delays, etc.) if done properly. A simple or complex trust can serve a variety of legal, personal investment or tax planning purposes. Specifically, a trust can assist you with the distribution of your estate to your loved ones; it can help protect your estate from your heirs’ creditors or from beneficiaries who may not be adept at money management; and a trust may not only allow the assets in your estate to pass outside of probate and remain private, in addition to possibly reducing the amount loss to court fees and taxes in the future.
There are different types of trusts, such as the A, A-B, or A-B-C living trust, special needs trust, second marriage trusts, irrevocable life insurance trusts, charitable lead trusts, charitable remainder trust, generation-skipping trust, qualified terminable interest property trust, grantor retained annuity trust, etc.
A trust is a fiduciary arrangement that allow a third party, or “trustee,” to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
A trust may be created during the life of the donor (called an inter vivos trust) or at the death of the donor (called a testamentary trust). The person who created the trust is most commonly referred to as the “trustor” of the trust. Other terms commonly used to denote the “trustor” are “settlor” and “donor.”
A trust can be either revocable (in which case the trustor is free to change his or her mind and retrieve the property within the trust) or irrevocable. Since trusts usually avoid probate, your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred using a will. Additionally, if it an irrevocable trust, it may not be considered part of the taxable estate, so fewer taxes may be due upon your death.
The above is only a partial list of items that relate to a trust and should be included as part of an estate planning meeting that should give you an opportunity to do some advanced planning with your loved ones.
If you are interested in discussing any of the items above or have any other questions, please feel free to contact me at 310-276-3550 or email me at Robert@roberthousman.com. You can also visit my website at www.roberthousman.com.
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