Trusts
Learn about the benefits and considerations of lifetime trusts and will trusts, essential tools for asset management and distribution during your lifetime and after your passing.
Lifetime Trusts
A lifetime trust, also known as an inter vivos trust, is a type of trust that is created during the lifetime of the person creating the trust (the grantor). Unlike a testamentary trust, which is created in a will and takes effect after the grantor’s death, a lifetime trust can be used to transfer assets to beneficiaries during the grantor’s lifetime.
In a lifetime trust, the grantor transfers assets, such as property, investments, or cash, into the trust. The trust is managed by a trustee, who is responsible for managing the assets and distributing them to the beneficiaries according to the terms of the trust.
There are several benefits to creating a lifetime trust:
- Control over assets: By creating a lifetime trust, the grantor can retain some control over the assets in the trust. For example, the grantor can specify how the assets are invested and when and how they are distributed to the beneficiaries.
- Protection of assets: A lifetime trust can be used to protect assets from creditors or lawsuits. Because the assets are owned by the trust, they may be less vulnerable to legal action against the grantor.
- Tax planning: A lifetime trust can also be used as a tax planning tool. Depending on the laws of the grantor’s state or country, transferring assets to a trust can help to reduce estate and gift taxes.
- Privacy: Unlike a will, which becomes a matter of public record after the grantor’s death, a lifetime trust can provide greater privacy because it is not subject to probate court.
Overall, a lifetime trust can be a useful tool for managing and protecting assets during a person’s lifetime and providing for their beneficiaries after their death. However, creating a trust can be complex, and it is important to seek the advice of a qualified attorney or financial advisor to ensure that the trust is structured properly and meets your specific needs and goals.
Will Trusts
A will trust, also known as a testamentary trust, is a type of trust that is created as part of a person’s will and takes effect after their death. The trust is funded with assets from the person’s estate, which are managed by a trustee according to the terms of the trust.
In a will trust, the person creating the trust (the testator) can specify how the assets in the trust are to be managed and distributed to the beneficiaries. For example, the testator may direct that the assets be used to provide for the education or healthcare of a beneficiary, or that the assets be distributed to the beneficiary in installments over a period of time.
There are several benefits to creating a will trust:
- Flexibility: A will trust can be customised to meet the specific needs and goals of the testator and their beneficiaries. The terms of the trust can be tailored to provide for the unique circumstances of each beneficiary, such as a disabled child or a spouse who may need ongoing support.
- Protection of assets: A will trust can help to protect assets from creditors or lawsuits. Because the assets are owned by the trust, they may be less vulnerable to legal action against the beneficiaries.
- Tax planning: A will trust can also be used as a tax planning tool. Depending on the laws of the testator’s state or country, a properly structured trust can help to reduce estate and gift taxes.
- Privacy: Like a lifetime trust, a will trust can provide greater privacy because it is not subject to probate court and does not become a matter of public record.
Overall, a will trust can be a useful tool for managing and distributing assets after a person’s death. However, creating a trust can be complex, and it is important to seek the advice of a qualified attorney or financial advisor to ensure that the trust is structured properly and meets your specific needs and goals.
For further advice on Trusts from experts that specialise in dealing with all aspects of estate planning, please contact us through our confidential online enquiry form or telephone 01327 317388
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