A trust is a legal entity and fiduciary relationship that allows an individual called a trustor or grantor to give another party, the trustee, the right to hold title to property and assets for the benefit of a third party, the beneficiary. Trusts are created for a number of reasons, for example, to control the precise distribution of your assets, to protect your legacy from creditors, for privacy and to avoid probate and estate taxes, or to preserve a portion of wealth while maintaining eligibility for programs such as Medicaid.
There are many categories of Trusts, but they generally fit into one or more of the following categories:
Living Trust or Testamentary Trust
A living trust or inter-vivo trust is a trust that where an individual's assets are placed in trust for use during his or her lifetime. The assets are transferred to the named beneficiaries upon the individual's death. Living trusts can be revocable or irrevocable.
A testamentary trust or will trust will specify how the assets of the individual are designated after the individual's death. The assets must first pass through probate. A testamentary trust is irrevocable.
Revocable or Irrevocable Trust
A revocable trust can be changed or terminated by the trustor or grantor during his lifetime. An irrevocable trustis one that generally cannot be modified or changed once it is established.
Funded or Unfunded Trust
A trustor or grantor will put assets into a funded trust during his or her lifetime. An unfunded trust consisted only of the trust agreement with no funding. Unfunded trusts become funded upon a trustor's death, or remains unfunded, contrary to its intent.
Types of Trusts
Some types of trusts include special needs trusts, credit shelter trusts, charitable trusts, generation-skipping trusts, insurance trusts, qualified terminable interest property trusts, spendthrifts trust, separate share trusts, blind trusts, Totten trusts, and more.
Trusts are not exclusively for the wealthy
Properly drafted trusts serve a number of estate planning objectives. Your circumstances should be evaluated to determine if you would benefit from a trust.
Contact Hartmann Law
Whether there is a life event that brings you to this page, or you have simply decided it is time, Hartmann Law is here to help. Each individual, couple, and family is different, and we offer dedicated and individualized attention to every Client. An Estate Plan will be discussed, created and tailored to your needs. Contact Hartmann Law today, so we can determine how to best achieve your desired result.