What kinds of trusts are there?In the world of trusts, there may be some confusion for those who are unsure on what a trust exactly is, and what types of trusts there are. In simplest terms, a trust is an agreement among three parties. There is the trustmaker or trustor, where this person creates the trust. The second party is the trustee who is responsible for the trust. The third party is the beneficiary or beneficiaries where they receive the benefits of the properties within the trust. Your lawyer will be able to assist you in creating a trust, along with creating the right type for you.
Living TrustsThis can be made and be in full effect during the trustor’s lifetime. This differs from other trusts because some trusts don’t go into full effect until after the death of the trustor. All living trusts are either revocable or irrevocable.
Testamentary TrustsThese are created by the the executor of the decedent’s estate when his last will and testament names the beneficiary. The will directs that the trustor’s property should be moved into the trust at their death.
Revocable Living TrustsThere are two main purposes for this type of trust. The first being a plan for mental disability, and the second to avoid probate of the assets the trustor funds into their trust before their death. A trustor has the right to change or expunge their trust at any time.
Totten TrustThis is a type of revocable trust. A person can deposit money into the financial of his or her choosing as the trustee for another. However, this gift will not be given until the grantor has passed away.
Irrevocable Living TrustsThe most common purpose for this trust is to move assets out of the trustor’s name and into the next generation for their use. This ends ups decreasing the value in the trustor’s estate for estate tax purposes. If you are the trustor, you cannot take back your property after it’s been transferred within this trust. Unlike a revocable trust, this trust cannot change, this will be set in stone. Among these sets of trusts there are other trusts that can be created to fit your purpose. Others that are of common use are Irrevocable Life Insurance Trust, where the trustor has an insurance policy on their life, a special needs trust for disabled beneficiaries, and a spendthrift trust that guides the trustee on how and when to distribute to the beneficiary.
Charitable TrustUsually charitable trusts are made to lower the tax on estate and gifts.
Tax-By-Pass TrustThe tax-by-pass trust allows one spouse to leave the other money.
Contact Your Garden Grove Trusts LawyerWhen you’re ready to create a trust it’s important you speak with us to better ensure that the trust created will meet your needs. The Law Offices of Lawrence H. Nemirow is here to help you make sure you’re setting up the right trust for your family. Call us today with any questions you may have! You can reach us by calling (562) 799-1379.
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