A trust fund is a very useful tool for estate planning that can ensure that your money and assets end up where you want them to be after you pass. Trust funds can only exist if three parties are involved: the grantor who puts the assets into the trust, the beneficiary who will be the recipient of the assets, and the trustee who manages the assets.
Although some states have their own laws pertaining to trusts, other states such as Pennsylvania have adopted the Uniform Trust Code. Because of this, laws relating to trusts in these states are often very similar to one another. Read on and contact the experienced Butler County trust attorneys at Heritage Elder Law & Estate Planning, LLC for more information regarding trusts as well as the other steps of the estate planning process.
How are trust funds beneficial?
Establishing a trust fund can ensure that both the grantor’s assets and the beneficiaries will remain protected. For example, if the recipients are under the age of 18, a trust fund will allow their future assets to remain under safe supervision until they come of age. It can also guarantee that once they receive those assets, it remains with them despite any specified circumstances.
It can also be helpful when it comes to softening the blow, or even avoidance, of potential legal hurdles and processes. For instance, the overall size of the grantor’s estate can be reduced by putting their assets into a trust fund which can lower the federal estate tax after they pass. Probate court can also be bypassed entirely which can save the beneficiaries time and money.
What are the different types of trust funds?
The different types of trust funds are completely circumstantial. Depending on their goals, the grantor can establish a wide array of different trusts in order to achieve their desired outcome. Specificity is essential in order to make sure the grantor’s assets are managed correctly.
One of the most common types of trust is the revocable living trust. This trust allows the grantor to modify and nullify its conditions. Due to fewer legal formalities, revocable living trusts are easier to manage compared to wills. However, because it can be dissolved at any time, it does not protect the assets of the grantor from creditors who can force a termination to obtain their assets.
Unlike revocable living trusts, irrevocable trusts are much more rigid. Once it is created, it can not be changed from the original terms and conditions. While revocable living trusts allow for the flexibility of the grantor to also be the trustee, irrevocable trusts do not.