Trusts

A Trust is an intangible thing, that is, one cannot see it, feel it or touch it. It is a form of ownership. Assets placed in a Trust are owned by the Trustee. The Trustee controls the Trust, investing and managing property, distributing income or Trust assets to the beneficiaries, and filing income tax returns where necessary. There are numerous types of Trusts: Living Trusts, Testamentary Trusts (a Trust created in your Will and coming into effect at your death), Life Insurance Trusts, Spendthrift Trusts, and Court Imposed Trusts. A Trust may be revocable (that is, the person who created the Trust may terminate it) or irrevocable (that is, the Trust cannot be terminated by its creator).

Trusts may be established to avoid probate, to reduce exposure to estate taxes (by eliminating appreciation in value in the hands of the donor), and to transfer income producing assets to children for a limited period of time so as to reduce income taxes. They may be used to furnish management and control of assets for a person whom one believes is incapable of prudent business judgment, or with respect to whom creditors are “pounding at the door”. (Spendthrift Trusts). They may also be used in Wills to provide for the care and management of property left to a spouse or minor children or grandchildren.

Trusts are useful and often complex tools which may be used as a part of a total estate plan. Tax and many other considerations must be taken into account, especially with the numerous and fairly constant changes in federal and state income, gift and estate tax laws.