Types of Trusts

A trust consists of three parties: (1) a settlor, (2) a trustee, and (3) beneficiaries. A settlor is the person(s) who establishes the trust and contributes assets to it. The trustee is the individual or entity appointed to manage the assets in the trust. The beneficiaries are the individuals who are named to receive the benefit of the assets in the trust. There are a myriad of trusts, and they all serve different purposes. You may wish to establish a trust to avoid or minimize taxation or to help your loved ones evade the probate process.

Without an experienced attorney's assistance, however, it may be difficult to determine which type of trust is beneficial for you, your assets, and your family. Once you choose a type of trust, you must determine the terms, such as when it terminates and what assets go to which beneficiaries.

Using the correct language for trusts is extremely important, because once certain types of trusts are created, their language and terms cannot be changed. Therefore, you should contact an estate planning attorney prior to establishing a trust.

Which trusts are right for you?

There are so many different types of trusts to choose from, so how do you choose the right one? Before meeting with a lawyer, you may want to do some minor research about types of trusts. The most popular trusts are revocable living trusts, which means the creator can change the terms of the trust as often as they like.

Revocable living trusts allow you to avoid probate, avoid conservatorship in case of incapacity, as well as provide for your beneficiaries in a responsible manner. Others trusts are setup solely for the purpose of distributing assets to an organization of your choice, such as charitable trusts.

Irrevocable trusts, which are often used for estate tax planning purposes, generally cannot be changed once they are established. Special needs trusts may be set up by family members or friends of incapacitated loved ones who are developmentally disabled to ensure that they will be properly provided for long after their parents are gone.

For those who are worried about protecting their assets, wealth protection trusts may be the perfect type of trust. Another common type of irrevocable trusts is life insurance trusts, which are established to hold life insurance on the life of the settlor, or another elected person.

Need assistance? We can help!

With over 60 years of combined probate and estate planning experience, the attorneys at Pederson Law Offices can help you choose the trust which will benefit you and your family the most.

We understand that the legal jargon associated with trusts may be confusing, and our attorneys can explain the different types of trusts, and how they may be beneficial to you, in a simple and clear manner. Do not get overwhelmed when trying to find a trust that is right for you.

Call our firm today at (805) 372-1507 to see how we may help you establish the perfect trust!

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