Establishing a trust is one of the most crucial steps an individual or couple can take to preserve their assets prior to passing. Many may not know, though, that there are a variety of trusts available.
A living trust is similar to a will in that it can be used as the foundation to disperse assets to beneficiaries. Additionally, if the creator of the living trust were to become incapacitated, a previously appointed trustee can step in to manage the assets. Also, with a living trust, most beneficiaries avoid probate, which saves them time and money.
Giving back to charities is one way you can continue to make an impact after your passing. By setting up a charitable trust, you designate certain funds to a particular organization. An advantage of a charitable trust is that the estate or gift tax is usually smaller or not applied.
Special Needs Trust
This type of trust is usually established for someone who receives benefits from the government. Typically, if a person receiving benefits from the government inherits or receives a substantial financial gift, they could be disqualified from continuing to receive government benefits. However, there are rules stating that this is not the case for receiving funds from a special needs trust.
Those with significant funds may choose to create a generation-skipping trust where assets are given to the grantor’s grandchildren rather than the grantor’s children (hence the title generation-skipping). Some may choose to secure a trust like this because estate taxes would be avoided.
Life Insurance Trust
A life insurance trust is when the trust is the beneficiary of a life insurance or multiple life insurance policies. When the person insured passes away, then the trustee named in the life insurance trust can distribute the proceeds from the policy to a beneficiary or multiple beneficiaries.
Interested in Setting Up a Trust?
A trust can bring peace of mind to you and your loved ones. It’s also never too early to set up a trust. If you are interested in learning about these types of trusts, or other strategies to distribute assets, contact the experienced attorneys at Chipman Mazzucco Emerson LLC.