Trusts are estate planning tools which can be used to assure an individual’s wishes are carried out properly. A trust is a document in which one person (the settlor) directs another person (the trustee) to hold property for the benefit of a third person (the beneficiary). However, it is possible for the trustee, the settlor and the beneficiary to be the same person, such as when someone creates a living trust.
Trusts can be used to select a guardian for minor children, prevent guardianship for disabled adults, avoid probate, minimize estate taxes, keep information private and deal with a multitude of other issues. The most common trusts are briefly explained below, but there are a myriad of different strategies and trusts that may be implemented in addition to those listed.
The most common type of trust. Used to select a guardian for minor children, avoid guardianship for disabled adults, avoid probate, and keep information private.
Often used for second marriages. Used to allow a beneficiary (usually a spouse) to receive income during his or her life and distributes the remaining property to other beneficiaries.
Used for disabled individuals so they may receive funds in addition to government benefits.
Used to minimize estate taxes for married couples.
Used to remove rapidly appreciating property, such as life insurance, from an estate, minimize estate taxes and protect assets from creditors.
Used to give funds to a charitable organization and receive favorable tax treatment.
Used to transfer funds upon death by adding someone’s name to a bank account.
