Trusts: For the Ultra Wealthy Only?
Are trusts only for the rich and famous, or can anyone use them for estate planning? The short answer is that they can benefit many, not only the rich. If you are thinking about setting up a trust, it may be a good idea to research family law Pasco County FL.
What is a Trust?
A trust is a legal arrangement in which assets are held by a third party (for example, a bank) for the benefit of one or more other people. Keep in mind that trusts are binding legal contracts, can be created to cover a wide variety of situations, and in some cases can be quite complex.
Types of Trusts
Trusts come in many flavors because they are versatile constructs used for a variety of reasons. Common types of trusts are:
- Family Living Trusts,
- Testamentary Trusts,
- Charitable Trusts and Charitable Remainder Trusts,
- Special-Needs Trusts, and
- Asset-Protection Trusts, to name but a few.
In addition, all of these trust types can be revocable or irrevocable, depending on how they are set up.
Why Set Up a Trust?
Trusts are set up to do a wide variety of things. Here are some of the more common reasons:
- To protect beneficiaries from poor judgment,
- To provide a vehicle for charitable giving,
- To shelter assets from estate taxes,
- To avoid court-mandated probate,
- To preserve privacy,
- To hold and collect funds to care for beneficiaries.
Working With a Professional
In order to set up a trust property, you’ll need to work with a competent professional estate planning attorney who is an expert in the creation of trusts.
Broadly speaking, these are the steps you need to take in order to establish a trust:
- Understand your reason(s) for establishing a trust
- Collect key information,
- Register the trust with the Internal Revenue Service,
- Transfer assets into the trust,
- Administer the trust in accordance with the trust’s legal guidelines.
It can be a complex process and professional guidance is necessary.
