It almost seems like new varieties of trusts are added to the toolbox of Wheaton estate planning lawyers on a daily basis. Trusts are used to fulfill a variety of purposes both during and after the creator’s lifetime.

Before creating a trust, it is helpful to review the types of trusts in Wheaton. Some trusts are irrevocable, which means they cannot be terminated and may be difficult to modify. Therefore, it is critical to understand the terms before committing to the establishment of this type of trust. To further your understanding, talk to a dedicated attorney.

The Basics About Trusts

Although many people think a trust is an account or a document, it is actually an entity defined by a relationship. A trust holds property for the benefit of a beneficiary who receives income or other distributions from the trust. The assets in the trust are managed by a trustee who is obligated by law to act in the best interests of the beneficiaries.

The person who establishes a trust and transfers assets into the trust is often known as the grantor. Some types of trusts in Wheaton involve situations where the roles of grantor, trustee and beneficiary are all undertaken by the same person.

Revocable Trusts

A revocable trust is one that could be changed or terminated during the life of the grantor. These types of trusts are sometimes referred to in Wheaton as “living” or inter vivos trusts although an individual could establish an irrevocable trust that takes effect during their lifetime.

Transferring the assets of an individual or couple into a revocable living trust makes it possible to avoid probate and guardianship proceedings when the grantor dies or becomes incapacitated. Revocable living trusts are among the most popular types of trusts in Wheaton.

When people set up an individual trust, they serve as trustee and name themselves as beneficiaries, so they continue to control and enjoy the benefit of their assets. In the event the grantor becomes incapacitated, a successor trustee may take over management of the assets. When the grantor passes away, assets may be distributed in accordance with the terms of the trust without the need for the expense and delays of probate proceedings.

Irrevocable Trusts

Irrevocable trusts cannot be cancelled and are difficult to amend. However, many different types of irrevocable trusts may be used to accomplish goals such as reducing estate tax liability, protecting property from creditors, avoiding gift tax, and providing for charitable purposes.

Examples of different types of trusts that fulfill theses purposes in Wheaton include:

  • Charitable remainder trusts
  • Irrevocable life insurance trusts
  • Spendthrift trusts
  • Special needs trusts
  • Charitable lead trusts
  • Generation-skipping trusts
  • Qualified personal residence trusts

Each of these basic types of trusts in Wheaton many have different variations. For instance, there are three commonly-used varieties of special needs trust – a self-settled trust, a third-party trust, and a pooled trust.

Further Details About Types of Trusts in Wheaton

For many people, a combination of trusts, wills, and other custom documents work together to form a comprehensive estate plan that delivers benefits in the present and provides for smooth transitions in the future. To learn more about the types of trusts in Wheaton and how they suit particular needs, it is a good idea to schedule a consultation with a trusts and estate lawyer.

Wheaton trusts that are not properly created or funded may be worse than useless. Those with existing trust documents may wish to have these documents reviewed to ensure that the provisions they have in place will fulfill their intended goals.