Trusts are no longer just for the wealthy. They are often created as a separate entity during life, or established in a will for the future care of a spouse, children or other loved ones. Most trusts are revocable, sometimes known as “living” trusts, created during one’s lifetime. In creating a trust an individual, usually called the grantor, establishes the trust to own assets, manage those assets, and distribute income and principle if needed for support of the grantor and/or the grantor’s spouse during their lifetimes. There must be an individual, bank or trust company, known as the trustee, to carry out the duties set forth in the trust document. The Grantor often names himself or herself in this role. Following the death of the grantor the trust can continue to own the assets for support of a surviving spouse, minor or adult children, or other loved ones. A trust can also distribute the remaining assets after the grantor’s death outright to named beneficiaries just as a will does.
Trusts are especially useful for those with minor children who cannot directly inherit life insurance proceeds, retirement funds, or other assets exceeding $5,000.00. Absent a trust in place or similar provision in a will a court conservator holds and administers the assets until the child’s 18th birthday. Court appointed conservatorships are often troublesome and costly. Trusts left for children can also be particularly helpful in that they can shield assets from bankruptcy courts and other creditors. Finally, trusts are often used to avoid probate and estate administration making it easier and less complicated for loved ones upon the death of the grantor and his or her spouse.
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