Trust funds get a bad rap. Many connect them with entitled “trust fund babies” who inherit enormous sums of money from ultra-wealthy family. But not only one-percenters benefit from creating accounts designated for specific purposes for beneficiaries. Certain trust funds pass outside of probate, they can potentially save beneficiaries time and money. Also, unlike wills, they are not made public. So, you may ask yourself: do I need a trust fund, too?
We suggest asking that question with a trusty (heh) attorney at your side. While you consider that question, below we explain a handful of commons trust funds and their purposes.
A living trust designates a trustee to manage assets for the beneficiary/grantor while the grantor is still alive. Trustees manage trusts according to the best interests and wishes of the grantor. Living trusts are typically revocable (amendable during a settlor’s lifetime). When the settlor dies, the trust automatically becomes irrevocable (cannot amend or revoke).
Also known as will trusts, testamentary trusts act more like a standard Last Will and Testament for the deceased. Unlike living trusts, these trusts do not go into effect until the death of the settlor. Will trusts can protect assets from a grantor’s creditors. They also restrain monies available to the grantors from the inheritance.
Irrevocable Life Insurance Trust
An irrevocable life insurance trust (ILIT) is a type of living trust set up to own a life insurance policy. An existing policy can transfer to the ILIT after formation. ILITs are irrevocable by definition. This is because the trust must be funded through placing a policy into its ownership. Several tax advantages, both income and inheritance, come with these trust programs.
Do you have questions about an existing trust? Do you need an experienced attorney to create a new trust for you? Every client has unique situations. We take time to understand your needs and wishes. Then we offer advice on your best options. Call John A. Cochran, Esquire, in Greensburg at 724-216-0704 or use our online form to schedule a free consultation.