Learning more about different trusts

Oklahoma residents may benefit from learning about the different types of trusts that are available. The two primary classifications of trusts are testamentary trusts and living trusts. A testamentary trust is established in a will and only goes into effect after the estate owner's death. Living trusts, otherwise referred to as "inter-vivos" are established during the estate owner's lifetime and can either be designated as a revocable or irrevocable trust.

Irrevocable trusts may not be able to be modified without the beneficiaries consent. However, assets' appreciation in the trust may be indemnified from estate taxes. With revocable trusts, the estate owner retains control and is permitted to modify or revoke the trust at any point during their lifetime. In an effort to avoid estate taxes, some people prefer utilizing credit shelter trusts, otherwise known as bypass trusts or family trusts.

Families with divorces and remarriages typically benefit from using qualified terminal interest property trusts so that a spouse can receive income generated by the trust and beneficiaries are qualified to receive a principal or remainder. Many people prefer to establish irrevocable life insurance trusts for a variety of reasons. These trusts provide beneficiaries with capital, help offset estate costs and allow estate owners to divest life insurance from a taxable estate. Generation-skipping trusts are typically utilized when estate owners want to leave tax- funds to their grandchildren.

People who need help with understanding more about trusts and estate planning may benefit from consulting a lawyer. Legal counsel may be able to assist estate owners with circumventing tax issues and evaluating the available options. Lawyers may be able to help with trust administration, estate administration or by acting as power of attorney when appropriate. People who need to understand more about how their own will may be affected by the probate process might benefit from contacting legal counsel.

Source: CNN Money, "What kinds of trusts are there?", December 07, 2014

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