TrustsA trust is a legal entity that holds title to property for the benefit of a person or entity. The person or entity responsible for managing the trust's assets is called the Trustee. Although the Trustee holds legal title to the the property in the trust, the Trustee can only manage those assets for the benefit of the person(s) the Trust is set up to benefit (i.e., the beneficiaries). The trust's beneficiaries have the right (i.e., equitable title) to have the trust's assets used for their benefit as directed in the trust agreement. A trust can be drafted to meet the legal requirements and conditions that you desire. For example, a trust can be drafted to ensure that upon the death of both parents, individual trusts would be established for each child according to the trust's terms as set forth by the parents. When used correctly, a trust can be a valuable and useful tool to manage assets and preserve wealth.
Revocable Living TrustA revocable living trust is a trust created during the grantor's (i.e., the person who creates the trust) lifetime and which becomes effective upon execution (rather than at the time of death as with a Will). The grantor retains the power to revoke the trust and reaquire its assets at any time prior to the grantor's death or incapacity. Because the grantor is treated as the owner of the trust assets for tax purposes, the entire trust proceeds are includible in the grantor's estate. Upon the grantor's death, the living trust may continue, or the assets may be distributed directly to the trust beneficiaries without the need to pass through probate.
Irrevocable Life Insurance TrustIrrevocable trusts are normally used to completely remove assets from one's estate and thereby save significant estate taxes. Because an irrevocable trust cannot be amended by the grantor, the appointment of an independent trust advisor should be considered. The independent trust advisor could make limited amendments and change trustees. |
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