A Trust is an instrument of contract used to secure a sum of money, held by a third party, for the future use of your beneficiaries. Trusts have been around since Roman times, so they aren’t a new thing. There are Trusts that exist during your lifetime, and the more traditional Trusts funded by your estate on your passing. There are Irrevocable Trusts and Revocable Trusts, the main difference being that in a Revocable Trust you can continue to change amounts for beneficiaries, add or reduce the funding, change beneficiaries, representative or represent your own Trust, etcetera.
Here’s a common way an average person could use a Trust, in the case where you think some accident or illness could take you away, and you want to provide for your family after you’re gone. This is just an example of how it could be set up to operate, and it goes way further than a will ensuring money is used wisely:
· The spouse is the successor trustee and primary beneficiary;
· The Trust is funded upon your death, by insurance (commonly), and your IRA or other retirement account (401k, etc.), stocks and bonds can be liquidated or held and profits injected on a continuing basis, etc.. Also, properties can be liquidated or the rent used as constant funding, etc..
Asset Protection Trust (like the Alaskan Trust, now several states have them), Constructive Trust, Discretionary Trust, Directed Trust, Dynasty Trust, Employee Trust, Express Trust, Fixed Trust, Grantor Retained Annuity Trust, Hybrid Trust, Implied Trust, Improvement Trust, Incentive Trust, Inter-Vivos Trust, Irrevocable Trust, Land Trust, Offshore Trust, Personal Injury Trust, Private and Public Trusts, Protective Trust, Purpose Trust, QTIP (Qualified Terminal Interest Property) Trust, Resulting Trust, Revocable Trust, Secret Trust, Semi-Secret Trust, Simple Trust, Special Trust, Special Power of Appointment Trust, Spendthrift Trust, Standby Trust, Statutory Business Trust, Testamentary Trust (Will Trust), and Unit Trust.
PS, this list is not exhaustive, there have been, probably are, and will be more trusts to come.
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