Trusts

1
Trusts

• Legal Document
• Settlor or Grantor Person who creates the
  trust
• Beneficiary or Beneficiaries Person or
  persons who receive the income and/or principal
  from the trust
• Trustee Person who manages the trust
• Corpus Property transferred to the trust

2
Living Trust

• Created during the settlor's lifetime
• Revocable Trust Can be amended, revoked,
  terminated or changed at any time by the grantor
• Irrevocable Trust If you transfer some or all
  of your property to an irrevocable living trust,
  you are giving up all your rights to that property

3
Testamentary Trust

• Created at death, usually in the Will
• Revocable up until the grantor dies (assumes
  competency at time of revocation)

4
Trusts

• Advantages of a Trust
• Privacy (not usually recorded)
• Avoids probate costs
• Lower risk of challenges
• Disadvantages of a Trust
• Initial and continuing legal and accounting costs
  
• Management fees
• Must make decisions now

5
Trust Beneficiary Avoiding Inclusion in
Beneficiarys Estate

• Strategy  Restrict the beneficiarys outright
  control of the trust corpus
• What are limited strings of control to avoid
  outright control?
• Beneficiary can use all the annual income
  Beneficiary can use up to 5 of the trust corpus
  annually for any purpose
• Beneficiary can use any amount of the trust
  corpus for her/his health treatment and ordinary
  living expenses