3 types of legal trusts

Legal trusts have become one of the most common ways to protect an estate. It can foreclose and distribute assets according to the wishes of the settler (founder of the trust) and ensure the longevity of a company. In a previous article, we mentioned 3 common types of legal trusts. They include the Qualified Personal Residence Trust (QPRT), Credit Shelter Trust (aka Family Trust), and the Dynasty Trust. Given the colonist’s objectives, each of these can be used for different purposes. Below we describe 3 more common types of legal trusts you should consider.

#1 – Irrevocable Life Insurance Trust

The irrevocable life insurance trust, increasingly common among those who own a business or other highly valued assets that cannot be liquidated quickly, uses your life insurance policy to pay for your estate expenses. Entrepreneurs usually do not want their heirs to have to sell the company to pay for the estate costs. Liquidation under those circumstances can have a significant impact on the value of the company. Instead, the settler’s life insurance policy is used to pay for the real estate costs associated with the business.

#2 – Trust for special needs

When a person receives financial assistance from the government, those benefits may be disqualified if that person inherits a large amount of money or receives a substantial gift. To ensure that those benefits are not compromised, a special needs trust can be established. Any gift or inheritance can be placed within the trust. An experienced attorney will often include a special provision within this type of trust. The provision may cause the trust to lapse if the beneficiary’s government benefits are ever disqualified.

#3 – Qualified Terminated Interest Property Trust

Your family may include people who are members through divorce and remarriage. In some cases, you want to make sure that the bulk of your estate goes to certain family members. Many people use a qualified property trust with cancellable interest if they have children and marry someone who has children of their own. This type of trust can be set up to ensure that their assets are given to their biological children when their spouse dies. In doing so, they can remove the possibility that someone else’s children will receive part of their estate.

Why you should hire a lawyer

If your estate is worth a significant amount, you should hire a lawyer who is qualified to provide estate planning advice. A good attorney can help you create the right kind of trust for your unique circumstances. He can work with you to review your objectives and create the type of trust that best protects your legacy. He can provide legal advice that will help you draft terms and conditions that govern how the trust will distribute your assets after your death. Creating a trust for your estate deserves the attention of a trained legal professional.