You know you’re getting older when you start to think about socking away some money for retirement instead of enjoying that second cup of latte every day. Sure, that foamy cup of wonder gets you through a long afternoon at work, but foregoing that second treat and putting the money toward a retirement account and watching that account grow, will also give you a warm feeling inside.
Trusts are all very similar in nature whether they are created to protect assets, develop estate planning, or provide private benefits. However, trusts do not have to deal with the same type of property and they are not all created for the same purpose or in the same manner. There are many different types of trusts that can be created partly because of the wide variety of purposes and individual needs. A trust can be created by almost anyone and they have different time periods, and they may have any amount of money or property involved. Until recent years, trusts were limited to only the wealthiest; and used for the sole purpose of being able to pass their wealth on to the next generations in a private manner. Today, families can use trusts to protect the equity in a family home or some savings that have been accrued for retirement or college. This ensures that the assets are protected. Trusts are very flexible therefore it is beneficial to speak with a legal expert when developing a trust for any purpose. There are three basic ways to classify trusts: by its purpose, as living or testamentary, or as revocable or irrevocable.
A trust is a legal arrangement which can be a very important tool for either a business or an individual. There are several different types of trusts that can be formed and they each have their own benefit. In order to understand the benefits of a trust, it is important to first understand exactly what it means legally. It is also important to know precisely how a trust works.
Many people do not have a good understanding of what a trust is; or how it is different from a will. There are many different types of trusts but the main purpose and benefit of having a trust is to keep a person’s estate out of probate after they have died. The biggest difference between a trust and a will is that upon death the property will not enter probate.
Even with a will in place, property has to go through probate, the court system, to determine all the different legalities of the will and how the properties are being dispersed. During the process of probate a lot of the estate will be consumed by taxes and sometimes by attorneys. By creating a trust, you transfer property, assets, securities, bank accounts and real estate to someone you “trust” while you are still living and it will carry over when you die.