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.
Subscribe To Our Blog
02/07/2019 - Widely Misunderstood Notions S
01/03/2019 - No Matter How Old You Are, Est
12/06/2018 - Everything You Need To Know Ab
11/08/2018 - Why one should hire an estate
10/11/2018 - Tax Reform Legislation 2017: C
09/13/2018 - The Difference Between Tax Avo
08/16/2018 - When you might need an attorne
07/19/2018 - Why Hiring a Lawyer is Always
07/16/2018 - 2018 Hope for the Future Schol
06/21/2018 - 5 Reasons for Hiring a Persona
05/24/2018 - 5 Qualities That Make a Law Fi
04/19/2018 - Everything to Know If Your Med
03/21/2018 - 5 Times You Should Think About
02/15/2018 - 3 Reasons Why You Should Hire
01/18/2018 - Why is It Important to Have a
08/02/2017 - 3 Ways to Invest in Real Estat
07/02/2017 - Estate Planning for the Young,
06/02/2017 - Benefits of a Non-Disclosure A
05/02/2017 - Easements 101 – What Exactly I
03/29/2017 - Choosing Commercial vs Residen
12/03/2016 - Happy Holidays!
11/30/2016 - What is a Non-Disclosure Agree
10/18/2016 - Strategies for Handling a Tax
09/23/2016 - Real Estate Law: The Legal Asp
08/14/2016 - Questions to Ask Your Business
07/14/2016 - Starting a Business? You’ll Ne
06/16/2016 - Estate Planning Primer
05/12/2016 - The Basic Differences Between
04/15/2016 - Monday is Tax Day: What to Do
03/16/2016 - Small Business Owners and Comm
02/15/2016 - Business Law: Guidelines for S
10/27/2015 - Top Legal Dramas Roundup
09/10/2015 - More Outlandish Tax Deductions
08/19/2015 - Why it’s Necessary to Have a W
07/10/2015 - A Part of Real Estate Symbolis
06/15/2015 - Offbeat Tax Deductions and Tax
05/21/2015 - Bizarre Estate Planning Outcom
04/07/2015 - The Ins and Outs of Being a Ta
03/11/2015 - More on What We Do