TRUSTS
THE PROPER REASONS FOR MAKE A LIVING TRUST
1. 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 taxable estate.
2. To provide for a minor, retarded or handicapped child or grandchild.
3. To ensure that the money doesn't fall into the hands of a spendthrift, a person who spends wildly, and without reason.
4. For Medicaid planning.
5. If you have assets in one or more countries and/or states.
6. 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.
7. To protect assets from potential creditors.
8. 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. |
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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. |
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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. |
Definitions:
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Trust: A Trust is where title to property is held by one person (the trustee) for the benefit of another person (the beneficiary). |
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Trustee: The person who holds the property for the benefit of another person. |
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Beneficiary: The person who receives the benefit of the property held in a Trust. |
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Donor/Grantor: The person who creates the Trust and puts the property in a Trust. |
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Intervivos Trust/Living Trust: A Trust that is established while the Donor is alive. |
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Testamentary Trust: A Trust that is drafted into a will and is established after the Donor dies. |
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Revocable Trust: A Trust which can be revoked at any time while the Donor is alive. |
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Irrevocable Trust: A Trust which cannot be amended or revoked. |