Trusts are legal entities that allow one party to manage assets for the benefit of another. They involve three key roles: the grantor who establishes the trust, the trustee who manages the trust, and the beneficiary who receives the benefits.
- The most basic types of trusts are revocable (living) and irrevocable trusts. A living trust is created when you’re alive and can continue after your death. You can direct the trustee to hold trust property until the beneficiary reaches a certain age or gets married.
An irrevocable trust is not easily changed or revoked. For this type of trust, you usually cannot change beneficiaries or change the terms. Irrevocable trusts are frequently used to help reduce potential estate taxes.
- Trusts can be beneficial for a number of reasons:
- Trusts can avoid probate court.
- Certain Trusts help reduce Estate taxes.
- Trusts provide more control over your assets and assets can be properly divided using Trusts.
- Trusts can protect your loved ones in worst case scenarios and ensure everyone in your family is taken care of.
- The structure of Trusts can assist children with special needs.
- You can fund your trust with cash, stocks, bonds, insurance policies, real estate, artwork, vacation homes, and many other assets. What you choose will depend on your goals for the trust. For example, bonds are ideal for income generation, whereas life insurance policies are useful for creating funds to cover estate taxes or to support your family after your death.
- You can create a trust by executing a legal document called a trust agreement, which lists the beneficiary and the trustee, and explains the benefits the beneficiary will receive and the trustee’s duties. This document is usually part of the estate planning process.
- Once you take the time to create a Trust, they are relatively low maintenance. While you may need to update your Estate Plan after new life events (such as the birth of a child, or purchase of a new asset), Trusts rarely need to be amended.
At Core Bank, we provide comprehensive services in administering a client’s trust with professional asset management. This includes Revocable and Irrevocable trusts designed to possibly avoid probate and estate costs. Learn more today.
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