proper reasons for making a trust
- To reduce your taxable estate: If you
feel your assets are going to increase appreciably, it
is better to allow the assets to grow inside a Trust,
outside your estate, so that you can transfer more to
your beneficiaries, tax free. One of the most common living
trusts is the irrevocable life insurance trust, which
would take the insurance benefits out of the decedent's
- To provide for a minor, retarded or handicapped child
- To ensure that the money doesn't fall into the hands
of a spendthrift, a person who spends wildly, and without
- For Medicaid
- If you have assets in one or more countries and/or states.
- In the event you are planning a second marriage, a trust
might ensure that the money is kept separate and apart
from your new spouse, for the benefit of your children,
or other beneficiaries.
- To protect assets from potential creditors.
- To avoid Probate,
where there are minor children involved or threat of objections
from children, spouse or other interested people.
Considerations before visiting your attorney:
- Do I want to give up legal title and legal control
over my assets.
- Who should be my trustee? The trustee should be someone
who has a "business head", who can file tax
returns, make wise investment decisions and has no personal
stake in the outcome of the Trust. You should also have
in mind a substitute trustee, in the event your trustee
is unable to fulfill his obligations.
- Who should be my beneficiaries? Whom do I want to benefit
and why. At what age, or under what circumstances do I
want my beneficiaries to get the money outright.
- Trust: A Trust is where title to property
is held by one person (the trustee) for the benefit of
another person (the beneficiary).
- Trustee: The person who holds the
property for the benefit of another person.
- Beneficiary: The person who receives
the benefit of the property held in a Trust.
- Donor/Grantor: The person who creates
the Trust and puts the property in a Trust.
- Intervivos Trust/Living Trust: A Trust
that is established while the Donor is alive.
- Testamentary Trust: A Trust that is
drafted into a will and is established after the Donor
- Revocable Trust: A Trust which can
be revoked at any time while the Donor is alive.
- Irrevocable Trust: A Trust which cannot
be amended or revoked.
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