When you want to make sure assets are managed appropriately, trusts can be an effective tool. There are different options when it comes to trusts, so you want to know what the benefits are and how to choose someone to create a trust on your behalf. This will make it easier to know that assets are handled appropriately through your lifetime and beyond.
Trusts can help you to reduce estate taxes and put conditions on how assets are distributed. They can be relatively flexible, but also complex, which is why you should know about the various kinds.
Living Trust
A living trust is one that is established while the grantor is alive. They have the opportunity to make changes or revoke trusts during their lifetime in most instances. The trustees must then follow the living trust through upon death of the grantor.
Testamentary Trust
A testamentary trust is created as a result of a will in place. This means that the grantor has passed and it can help to preserve assets for children, ensure that special needs beneficiaries are taken care of and gift to charities. It can also prevent minors from inheriting property automatically once they reach the majority age in the state they live in, which can range from 18 to 21 years of age. It is also commonly referred to as a “trust under will.”
Funded/Unfunded Trust
There are two types of trusts — funded and unfunded. The funded ones are funded by the grantor during his lifetime or after death. It generally means that money or property has been specifically set aside. Unfunded ones are general agreements and may remain unfunded or become funded upon the death of the grantor.
Revocable/Irrevocable Trust
It’s also important to look at the revocation of a trust. If a trust is revocable, it means that the grantor has the ability to make changes during his or her lifetime. This can mean that a person who once was part of a trust can be removed. An irrevocable trust is just the opposite. With these trusts, the grantor loses control of the property and has to follow the rules of the trust just like everyone else.
Getting Help with Wills and Trusts
When you decide you want to set up a trust for someone, you want to look at what kinds of assets you are going to be providing. There may also be tax implications that you want to consider, which can be substantial depending upon the value of the assets. When you are ready to hire a legal professional you can count on to help you with estate planning and trusts, Shelton & Power, LLC can provide you with everything you need.