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Is There More Than Just One Type of Trust?

Posted on Wed Feb 13, 2019, on Trusts

Estate Planning Lawyer Allentown, PA

A trust is a written agreement that lists the rules for how a person wants his or her property to be distributed after passing on. Those who have never written a trust before may have no idea where to begin. If a person were to set up a trust, it is in their best interest to consult with an estate planning lawyer Allentown, PA offers who can be a resource of information. Not all trusts are the same, as there are several types of trust documents that can be written depending on the wishes of the creator.

Q: Who plays an important role during the creation of the trust?

A: The trustor, trustee, beneficiary, and attorney are all important parties when the trust document is being created. The trustor is the person who is granting the trustee control over assets, property, and estate. The trustee is then responsible for safeguarding and managing the trust. Beneficiaries are those chosen by the trustor to receive a portion of the estate based on the instructions provided.

Q: What is the main use of a trust?

A: Many people establish trusts as a way to ensure loved ones receive a legacy. It can be an emotional task to take on.  Attorneys are often consulted for support and legal insight. This is true during the initial planning as well as when the trust is being drafted. Potential benefits of having a trust can include reduced estate taxes.  Further, trusts provide straightforward distribution of assets to closest loved ones. This can avoid probate and provide creditor protection.

Q: Are there different types of trusts that a person may write?

A: Yes, there various kinds of trusts that may be written for specific intentions. Most trusts fall into two main categories, Revocable or “Living Trusts” and Irrevocable Trusts. 

Revocable Living Trusts.

A living trust is written by the trustor during his or her life, with assets that are intended for use while living. This trust enables the trustor to benefit from the trust before passing. But it also ensures assets are passed on to beneficiaries after death.

A revocable trust is a document that can be terminated, changed or altered during the trustor’s lifetime by only themselves. It is commonly set up as a way to transfer the assets outside of the probate process.

Irrevocable Trusts.

An irrevocable trust is when the trustor cannot alter the trust while living or at death. This kind of trust entails assets that cannot be transferred back into the trustor’s possession. Additionally, irrevocable trusts can be more tax efficient, with very minimal estate taxes to be paid. Many trustors prefer an irrevocable trust. Mostly because they are able to transfer their legacy out of their name and immediately into the next generation of loved ones.

Q: What if someone wants to give their assets to a charity?

A: Trusts can be used for charitable giving.  A charitable trust can be created and built up over the course of the trustor’s lifetime. Later, at death, the assets are to be transferred to the charity listed in the document.

Is There More Than Just One Type of Trust?

Contact Klenk Law for their insight into estate planning and types of trusts.

Tags:

Irrevocable Trust, Revocable Trust

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