Learn about some of the different types of trusts available through this informative matrix.
- A trust provides a flexible and advantageous way for you to leave your assets to future generations while reaping certain present benefits.
- Different types of trusts suit different needs, and what’s best for you will depend on your specific circumstances and what you hope to achieve through the establishment of the trust.
- Types of trusts include living trusts and testamentary trusts, and revocable and irrevocable trusts.
Trusts can be extremely effective estate planning tools for minimizing taxes and caring for your beneficiaries according to your wishes, both during and after your lifetime. There are many different types of trusts, and they can be complex. Benefits may include tax minimization, asset protection, multigenerational wealth transfer, charitable giving, and many others.
A revocable trust is a flexible option for the disposition of assets, as it can be changed, or revoked entirely, at any time by the grantor while he or she is living and competent. A revocable trust offers no current income tax advantages to the grantor, but the grantor can make principal and income withdrawals at any time. It may also provide a flexible way to manage assets in the event of the incapacity of the grantor.
By contrast, the grantor cannot alter or revoke an irrevocable trust, and the trustee is given sole control of the trust. By relinquishing the opportunity to change the provisions of the trust, however, the grantor may be able to reduce the estate taxes that would be owed at his or her death. This is accomplished by removing from the grantor’s estate both the trust property and future income and appreciation that arise from the property. There are many kinds of irrevocable trusts, including dynasty trusts, asset protection trusts, charitable trusts, and grantor retained annuity trusts (GRATs). It’s important to note that some irrevocable trusts, including dynasty trusts and asset protection trusts, may only be available in certain jurisdictions, including Delaware. Therefore, the structure and benefits of these trusts will vary based on each jurisdiction’s specific rules and statutes.
Download this informative matrix to learn more about the features and benefits of different types of trusts.
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