An estate planning trust or a family living trust, also known as family trust, is a financial vehicle created by a grantor for the benefit of the beneficiaries named in the trust. The trust can hold property, assets, or funds donated by the grantor. The estate planning trust and any holdings within it is managed by a trustee. The trustee can be a trust company, bank, individual, or group designated by the grantor. The trustee can also be named as a beneficiary in the trust.
There are many types of estate planning trusts that can be implemented as part of a sound financial planning strategy. Each estate planning trust has its own unique advantages and offers a different approach and tactic to estate planning. A testamentary trust is one that is created within a Last Will and Testament and the provisions and regulations of the trust are contained within the will. An irrevocable trust cannot be modified or canceled by the grantor without the permission of the beneficiaries named in the trust. An irrevocable trust removes the assets or funds transferred to the trust from the grantor's estate therefore not taxable as assets or income of the grantor. A revocable trust can be altered and even terminated during the life of the grantor. However, a living trust revocable stays within the grantor's estate and therefore taxable as a part of the estate. It is important to know living trust information to know the difference between revocable and irrevocable.
Different types of estate planning trust include:
- Testamentary Trust
- Exemption Trust
- Grantor Retained Annuity Trust (GRAT)
- Asset Protection Trust (APT)
- Irrevocable Trust
- Revocable Trust
- Living Trust or Inter Vivos Trust
- Unit Trust
- Clifford Trust
- Pure Trust
An estate planning trust can save your family and beneficiaries many of the hassles associated with probate court including reducing the time your estate is in probate, reducing many of the fees and costs associated with the probate process, and directly transferring some assets and funds to your beneficiaries bypassing probate court completely. A capable estate-planning attorney can explain how the different estate planning trusts work and which ones are better suited for your particular financial situation.
Contact an estate-planning attorney if you have any questions regarding estate planning trust or any financial planning related issues.
