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A family trust is an estate planning tool that can preserve your family's wealth across generations. Here's how they work and how to set one up.
Family trusts are meant to live beyond the grantor's life. A family trust has an extended lifespan that enables it to distribute assets based on designated milestones (ie., marriage, having children).
An inheritance trust – also known as a family or testamentary trust – is a legal arrangement designed to manage and protect assets for the benefit of heirs or beneficiaries after the grantor ...
Estate planning may involve a will, trusts, beneficiary designations, powers of appointment, property ownership (for example, joint tenancy with rights of survivorship, tenancy in common, tenancy by the entirety), gifts, and powers of attorney (specifically a durable financial power of attorney and a durable medical power of attorney).
The term "incentive trust" is sometimes used to distinguish trusts that provide fixed conditions for access to trust funds from discretionary trusts that leave such decisions up to the trustee. Inter vivos trust (or 'living trust'): A settlor who is living at the time the trust is established creates an inter vivos trust.
A testamentary trust provides a way for assets devolving to minor children to be protected until the children are capable of fending for themselves; [3] A testamentary trust has low upfront costs, usually only the cost of preparing the will in such a way as to address the trust, and the fees involved in dealing with the judicial system during probate.
To decide if a living trust is the best option for you and your family, consult with an estate planning specialist who can help you carefully weigh your estate planning alternatives.
Residence trusts in the United States are used to transfer a grantor's residence out of the grantor's estate at a low gift tax value. Once the trust is funded with the grantor's residence, the residence and any future appreciation of the residence are excluded from the grantor's estate, if the grantor survives the term of the trust, as explained below.