Trusts – A Great Tool to Save Money
December 20th, 2009 Filed under: ab trust,Executor Fees,sample wills,Trusts attorney — Estate Planning Author
One way you can reduce estate taxes and the costs of probate court is bypassing it. This is why trusts have become so popular. Trusts are an excellent estate-planning and property managing tool. They are fairly simple and inexpensive to create and are accessible to everyone.
Private citizens create trusts for many reasons. One particular reason why many people create a trust is to prevent certain assets or capital from going to probate court when you die. A way to do this is by creating a trust in favor of a beneficiary who at the time of the formation of the trust is incapable of managing the property that is intended for him or her, either because he or she is a minor, or because he or she has been legally declared incapacitated. For example, a parent can create a trust in favor of his three minor children, providing that the funds transferred to the trustee will be used to finance the children’s future college studies in equal parts. Another example would be the case in which a parent creates a trust in favor of his or her autistic child to provide for his or her future special needs, called special needs trust, for the child’s personal and medical care.
In simple words, a trust is a legal arrangement made between three persons, generally speaking. The owner of the trust is called the trustor. The person whose name the trustor is going to transfer the property is the trustee. The trustee has the obligation of managing and protecting the property in benefit of a third person, the beneficiary. Instead of persons, there could be an institution. There are two broad categories or types of trusts: living revocable trust and testamentary trust. Living trusts are those created to operate during the trustor’s lifetime. The testamentary trust starts working when the trustor dies.
