Trusts are one type of tool used in estate planning. A trust is created when a donor appoints a trustee to manage donated assets for the benefit of a beneficiary. It can remain in existence for a long period of time in order to manage the assets the trustor wishes to pass to beneficiaries.
Trusts can be broken down into a two general categories: irrevocable or revocable. An irrevocable trust cannot be changed by the donor after he creates it. In contrast, a revocable trust can be terminated or changed by the donor after creation. The donor may wish to remove property from the trust or terminate it altogether. Once the donor dies, the revocable trust generally becomes irrevocable.
There are a number of types of trusts, used for a variety of purposes. A special needs trust is created for the benefit of a special needs individual. A testamentary trust is created by the terms of a will and becomes effective when the donor dies. A fixed trust provides strict instructions for the trustee on how to manage and disperse the trust assets. A charitable trust is created for the benefit of a charitable organization or the public at large. A tax bypass trust is created by the terms of a will and allows the donor to leave money to his or her spouse, while avoiding estate tax when the spouse dies. These are just a few examples of the ways that trusts can be customized to meet a donor’s specific situation and requirements.
It is necessary to hire a qualified estate-planning attorney if you wish to create a trust. If you would like to discuss whether a trust is right for your needs, feel free to contact us at (626) 696-3145.
