Wolterman Law


The Basic Differences Between Types of Trusts
Thursday, May 12, 2016

Creating an estate plan is unique to each individual and family, and depends on many different factors. One component of an estate plan can be a “trust.” There are to basic types of trusts: living trusts and testamentary trusts. If a trust is set up during your lifetime, then it is a “living” or “inter-vivos” trust. Alternatively, a testamentary trust is set up in a will established only after a person’s death, when the will goes into effect.

Living trusts can be “revocable,” which allow you to maintain control of all the assets in the trust and gives you the freedom to change the terms of the trust at any point during your life, or “irrevocable,” in which you relinquish the assets in the trust and you are not typically able to make changes to the trust without consent from the beneficiary. Irrevocable living trusts are not subject to estate taxes.

There are many different kinds of trusts, each designed for a particular situation; a few examples include:

Family Trust: with this type of trust, you include in your will an amount bequeathed to the trust that does not exceed the estate-tax exemption, then pass the remainder of your estate to your spouse tax-free. Additionally, the money in the trust is never subject to estate taxes, no matter how much it grows.

Dynasty Trust: this kind of trust allows you to transfer large amounts of money, tax-free, to beneficiaries who are at least two generations younger than you, traditionally your grandchildren.

Qualified Personal Residence Trusts: this type of trust removes the value of your home or vacation home from your estate.

Irrevocable Life Insurance Trust: If you’re willing to surrender ownership rights of your life insurance policy, then you can have it removed from your taxable estate. The money from your policy can then be used to help pay any estate costs and provide your beneficiaries with tax-free income.

We have assisted many individuals and families in structuring and maintaining a personalized estate plan. Estate planning is a process that requires a trusting relationship between the attorney and the family, often developed over years and across many life events.  Call us anytime with questions about estate planning or to set up an initial consultation. 

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Wolterman Law Office LPA

Wolterman Law Office LPA provides legal counsel for clients in Hamilton County, Warren County, Clermont County and Butler County in Southwest Ohio, including communities such as Loveland, Cincinnati, Mason, West Chester, Blue Ash and Milford.

434 W Loveland Ave
Loveland, OH 45140

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