There are many important components in an estate plan. Trusts are one of the most significant. If you would like to learn more about the different types of trusts in Pennsylvania, keep reading and speak with our experienced estate planning attorneys to learn more.
What is a trust in Pennsylvania?
A trust is an agreement that allows a person to select a trustee and authorize the trustee to take care of their assets until the beneficiary inherits them. It is imperative to understand the different title names involved in a trust. First, the individual who creates a trust is known as a trustor. The person who inherits the assets within the trust is known as a beneficiary. A third party’s purpose is to maintain the trust on behalf of the beneficiary.
What are the different types of trusts?
Every family has unique circumstances, which is why there are various types of trusts in Pennsylvania. Some of the most commonly used trusts in Pennsylvania include the following:
Revocable Trust: This type of trust is one of the most common because it is able to be modified, changed, or terminated at any moment without the need for the beneficiary’s consent.
Irrevocable Trust: Here, the trustor is required to give up their rights and any access to the trust at the time that it is produced. This suggests that they cannot change or terminate it at any point.
Irrevocable Life Insurance Trust: With this kind of trust, a trustor is able to remove their life insurance from the estate plan so that their beneficiaries are free from any taxes that are put on it.
Charitable Trust: There are two kinds of charitable trusts. A charitable trust allows an individual’s choice of charity to profit from the financial gift for a specific period of time. When the period ends, the remaining assets may go to other beneficiaries. A charitable remainder trust permits charities to get the assets in a trust at the end of its term. Until then, the donor sustains interest in the gift.
Special Needs Trust: This applies to when a loved one with a disability is chosen by a trustor to make sure they receive the financial support they need throughout their life.
If you have any questions about the different types of trusts and what might be best for you and your future, do not hesitate to reach out to our experienced Pennsylvania firm.
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