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Retirement and Estate Planning

 

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Planning with Trusts, the Basics

Trusts can be grouped in to the following categories:

  • Living trusts - established while you are still alive
  • Testamentary trusts – established by the terms of your will

Living Trusts can be:

  • Revocable – meaning that the trust creator can decide to revoke the trust, or a portion of the trust, and resume ownership of the assets
  • Irrevocable – meaning that the trust creator has permanently given up ownership and most or all control of any assets placed in the trust

See Revocable v Irrevocable Trusts below.

There are a variety of reasons to set up a trust. In some cases you may even want to do so many years before you might expect to die. People often ask, “When should I consider a trust?” Here are some of the reasons for setting up a trust:

  • Avoiding probate - This is a common reason for establishing a living trust
  • Asset Management - Having a particular individual or a professional asset manager manages all of your assets; may apply to all kinds of trusts.
  • Timed Disposition of Assets - Controlling the timing of disposition of your assets to your heirs; may apply to all kinds of trusts
  • Privacy - Keeping your affairs away from public scrutiny. Trusts usually do not become public documents, while wills do, although the pour-over will that should accompany every living trust does require probate, and may cause the living will to become a part of the public record; may apply to living trusts
  • Appropriate Disposition - Being certain that both the trust grantor, and later, the grantor’s heirs are cared for as their needs arise; may apply to all kinds of trusts.
  • Asset Protection - Insulating your estate from the claims of creditors (depending on your state’s laws the trust may need to be irrevocable for such protection); may apply to living trusts
  • Fairness and Clarity - Being certain that you dispose of or distribute assets effectively while you are still of a clear mind; may apply to all kinds of...

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