Trusts are documents created by an estate planning lawyer for an individual that wants to specify how his or her assets should be transferred during life or after death. A trustee holds, works on, and manages the assets for the benefit of the individual’s estate. There are many types of trusts you can establish to protect your assets. Here are eight to consider:
- Testamentary Trust
A testamentary trust is sometimes called a living trust. This trust provides shelter for an individual’s assets during his or her lifetime. Upon death, the assets transfer to a trustee to distribute.
- Insurance Trust
The insurance trust places a life insurance policy into a trust to remove it from the estate’s taxes. By freezing the insurance policy, the proceeds are secured as payment toward estate costs when the insured dies.
- Charitable Trust
A charitable trust is set up to benefit a non-profit organization or charity. If it is a remainder trust, funds are disbursed to designated relatives during the individual’s lifetime. When the individual dies, the remaining money or property is donated to the listed charities.
- Bypass Trust
Also known as a credit shelter trust, the bypass trust permits a bequest of an amount up to the estate-tax exemption. Any money in this type of trust is free of estate taxes forever.
- Share Trust
Sometimes called a separate share trust, this is a unique legal document. Within this trust, a parent can identify specific and different features of disbursement of items, money, or property for each beneficiary.
- Generation-Skipping Trust
Sometimes grandparents want to provide assets for their grandchildren, and that is what the generation-skipping trust will do. This agreement bypasses a generation and leaves money to relatives that are at least 37.5 years younger.
- Spendthrift Trust
When a beneficiary has problems managing money, a spendthrift trust is often the answer. The trust protects the money from creditors and keeps the beneficiary from squandering his or her interest away.
- Payable-on-Death Trust
The payable-on-death, or Totten trust, can be created by an individual that also acts as the trustee. The trust covers only liquid assets and avoids probate when the trustor dies. However, the trust must be identified as a trust to qualify for tax avoidance.
Create Your Trust Today
If you have questions about how to set up a trust for your children, grandchildren, or property, contact a lawyer, like an estate planning lawyer from Klenk Law today. You can protect your finances with the help of a knowledgeable advisor, and your lawyer can help you find a qualified trustee to manage your accounts.