Trust
Types of Trust
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As a specialist in Wills & Probate, knowing the types of trusts will enable an attorney to advise clients suitably on estate planning and management of assets. There are five key types of trusts:
Revocable Living Trust: The settlor is permitted to retain control over trust assets during his or her lifetime. One can amend or revoke it as per one’s needs. At the time of the settler’s death, it turns into an irrevocable trust, and the assets are distributed as per the terms of the trust among the beneficiaries, avoiding probate.
Irrevocable Trust: It differs from the revocable trust in that, once entered into, it cannot be revoked or changed at all. This enables asset protection and probably tax benefits. On the view of the IRS, assets moved into an irrevocable trust are no longer part of a settlor’s estate.
Testamentary Trust: A trust under a will is known to be a testamentary trust; it comes into existence only on the death of the settlor and lays down the terms for the distribution of assets among the beneficiaries. This kind of trust is entered into mainly for making provisions with regard to minor children or those with special needs.
Charitable Trust: This trust is established for the purpose of benefiting charitable organizations or purposes. The settlor puts his or her assets into the chosen charity; in return, the settlor obtains tax benefits. Charitable trusts may be created during a settlor’s lifetime, referred to as an inter vivos trust, or after his or her death by a will or under testamentary provisions.
Special Needs Trust: Also known as a supplemental needs trust, a special needs trust is a specially drafted trust that allows a person with a disability or special needs to maintain his or her eligibility for government benefits, such as Medicaid or Supplemental Security Income (SSI). These trusts allow for the management of money to better the quality of life for the beneficiary while preserving the beneficiary’s eligibility for important benefits.
In the ability to outline these critical trust types, Wills & Probate specialists are able to apply these techniques in estate planning strategies that meet the unique needs of the clients and manage everything according to their desires.