Understanding The Basics Of Trusts
At its most basic level, a trust is a contract designed to pass property and assets to beneficiaries without subjecting the beneficiaries to probate. The person creating the trust (known as the trustor or grantor) places money and property in a trust and then chooses someone (known as a trustee) to manage the trust. The trustee is responsible for transferring assets to the beneficiaries according to the directives of the trust.
There are two main categories of trusts: revocable, or living trusts, and irrevocable, or testamentary trusts. As the name suggests, a living trust is active while the grantor is alive. Living trusts can be used to transfer assets to beneficiaries while the grantor is alive and after they pass away. Living trusts are easy to change or cancel. Testamentary trusts don’t become active until the grantor dies and cannot be changed without the permission of the beneficiaries.
Other Uses For Trusts
There are dozens of different kinds of trusts used for different purposes. The main reasons most people come to our firm to create a trust are to avoid probate, protect assets and minimize taxes. Using a trust to provide for minors or people incapable of taking care of themselves is also a common reason for creating a trust. Other types of trusts include:
- Credit shelter trust
- Education trusts
- IRA trusts
- Medicaid planning trusts
- Charitable lead trusts
- Asset protection trusts
There are too many different kinds of trusts to list, but you should be aware that trusts can be customized to meet your specific needs and goals. We always consider whether a trust is appropriate for our clients when doing estate planning.
Contact Deal, Moseley & Smith LLP To Learn More About Trusts
Creating a trust is a great way to protect your assets and spare your beneficiaries the hassle of probate. To discuss whether a trust is appropriate for you, call Deal, Moseley & Smith LLP at 828-263-4721 or fill out our online contact form to schedule a consultation.