What is a trust?
A trust is a plan to permit you to say where your money and other assets go after your death. The trust gives you full control over the distribution of your assets.
When you should consider creating a trust?
If your assets exceed $675,000.
What are the types of trusts?
There are many types of trusts. Some of the types include: - Charitable Remainder Trust
- The Irrevocable Trust
- The Revocable/Living Trust
- The By-Pass/Family Trust
What is a Charitable Remainder Trust?
- It is used when there is an interested charity, single individual, or beneficiaries who might be remembered.
- What does it do? It gives an income tax deduction, an income stream of 5-7% for up to twenty years, benefits the charity, and saves on the Estate Tax.
- It can be used as "Wealth Replacement."
What is the Irrevocable Trust?
- Used with Insurance Trusts
- Removes assets from an estate
- Passes to beneficiary per instructions of the Trust
- Requires a non-family member to be a Trustee
- Saves on taxes
- Avoids probate
What is Revocable/Living Trust?
- Permits property to be separated by ownership
- Avoids probate
- No separate income tax forms required during your life
- Trust not filed in courthouse
- At death of grantor, passes per instruction of Trust
- Trustee can be the grantor (owner)
- Does not save on taxes
- Effective Uses:
- Out of state real estate
- When potential for a will to be challenged
- Can be used to let another manage property (e.g. money)
What is the By-Pass Trust (Family Trust)?
- Only property "owned" by individual
- Jointly owned property goes directly to other owner
- Funded to amount of unified credit
- Interest to spouse
- Principal to heirs
- Principal passes without estate tax or income tax