A trust is an essential part of any asset protection plan or estate plan. It also has significant privacy benefits. A trust is a legal arrangement that has been around for a minimum of several hundred years. Every trust, regardless of the type, has certain essential characteristics. A trust is going to have one or more trustees and some named beneficiaries. The trustees are responsible for administering and carrying out the terms of the trust. The beneficiaries are the individuals who are entitled to income or principle from the trust at either the present or some point in the future.
A trust generally takes the form of a written agreement between the settlor (the individual creating the trust) and the trustee. The written agreement typically provides for the settlor to transfer some assets to the trustees who will then hold those assets for the benefit of the beneficiaries.
Until very recently, trusts were used almost exclusively by the very wealthy in order to maintain privacy and to pass on wealth to succeeding generations. The privacy benefits were the most important. Now, however, ordinary people are using trusts as well. This means that lots of people with equity in the family home or some savings that have been put away for retirement or college are creating trust funds to protect their assets and estates.
A trust can be designed to accomplish almost any goal a person has. Three trust types are the Limited Term Trusts, Life Insurance Trust, and the Privacy Trust.
Limited Term Trusts are designed to last for a specified number of years. At the end of the term, the trust's assets are returned to the settler. This allows the trust's assets to be protected for the term but then completely accessible when the settler wants them again.
A Life Insurance Trust is one of the most effective and popular estate planning and asset protection strategies available. These are designed to hold one or more of the policies on the lives of a parent. The benefit is that the proceeds of a life insurance policy are protected from an estate tax. A properly drawn trust will keep the proceeds out of a person's estate, and free of an estate tax, so that the entire amount of the life insurance policy will be available to the person's family.
A Privacy Trust is aptly named. These trusts are designed to achieve financial privacy. They, when drawn up correctly, successfully conceive ownership of bank and brokerage accounts, the family home, rental properties, and any interests in other entities or property.
For more information on estate planning and trust funds, please visit http://www.probatelawyeraustin.com .