There are many ways to structure a trust. The most important step is choosing a trustee. The trustee may be a family member or friend, or it may be a third party such as a bank. There are benefits to both options. Here are a few. You should also know that there is no legal requirement to use a third party, though. The trustee should be willing to administer the trust as the grantor intends. The following are some things to keep in mind when choosing a trustee.
The beneficiaries of the trust must be clearly named and identifiable. This is true of both irrevocable and discretionary trusts. A trust can be charitable or have a specific objective, such as a charitable purpose. If the settlor wished to avoid taxation, he or she can use an irrevocable trust. This type of trust is often used by individuals to make large financial gifts. As a result, there is no gift tax if the financial property is transferred to a beneficiary.
A trust can benefit any number of people, such as children, a spouse, a foundation, or a charity. You may choose a specific number of beneficiaries, or use a general trust to cover all of your needs. You can also designate a trustee to make decisions on your behalf in the event that you are unable to do so. If you want to set up a trust that will benefit several beneficiaries, make sure to discuss your goals with a financial advisor who is experienced in estate planning.
Trustees must fulfill their fiduciary duties to beneficiaries, including loyalty, prudence, and impartiality. Trusts also require trustees to maintain accounting and records that comply with the law. A trust can also protect a beneficiary’s interests during a divorce. A trust can prevent the death of a beneficiary or reduce estate taxes if done properly. Trustees should also discuss the details of the trust with their family before appointing one.
A trust can protect your assets from taxes and avoid probate court. It can spare children from the hassles associated with the probate process and can carry out your last wishes. A trust can also protect your assets from creditors, limit the ability of beneficiaries to pursue a lawsuit, and even reduce estate and gift taxes. Regardless of the reason for using a trust, it is worth considering. A trust is not an estate, and can protect your assets from contested wills.
Despite the many benefits of using a trust, it is not for everyone. If you have a modest amount of money, setting up a trust may be the perfect option. An online trust service will cost you only a few hundred dollars. An attorney will cost you a few thousand dollars, depending on how complex the trust is. But remember: trusts aren’t just for millionaires! The right trust will protect your assets and control your money even if you die.