A trust is beneficial even when the grantor is alive and after his death. A grantor, settler or donor is the person who is responsible for settling the trust. Trust funds can be set up by single or a group of individuals. There are always some reasons behind forming a trust. These reasons vary from persons to persons. Besides the grantor, there is or are trustees. These trustees are appointed by the grantor and they take care that the trust is functioning according to the will or wish of the grantor.
The first and the foremost benefit of a trust is the tax saving. A trust can protect the grantor from paying huge taxes and claims. Money kept in abeyance in the form of a trust can be helpful in your old age when you take retirement, when your children need money for higher studies or for the secure future of your spouse or when you plan to do a venture in business etc. The money enveloped in the name of trust is exempted from taxes like the estate tax and the like. The tax subsidy actually varies with the kind of trust you have formed.
Types of Trusts
•If a person is alive and forming a trust then such a trust is called a living trust. Every trust including the Living trusts can be bisected to form the- Irrevocable and Revocable trusts. The former are those where the statements cannot be altered by the grantor during his lifetime and even after that once legally formulated and the in the revocable trusts the settler can change his statements even after they are legally penned down once till the time he lives. For instance a trust set up by parents that provides for their minor children in case any problem grips them. Both these types of trusts revocable as well as irrevocable have their positive and negative aspects.
•There is also the Life Insurance Trust that ensures some kind of financial safety for the survivors in case something happens to the donor. A life insurance trust fund is better than a simple life insurance policy because of the tax exemption. The trust fund is not subject to the cumbersome Estate Tax while when the beneficiaries receive the policy money it is supplemented with this tax. Again there are pros and cons associated with both, it is recommended to take the advise of an attorney before reaching any conclusions.
•Bypass Trust is formed by a couple. When either of the spouses die, the estate is transferred to the other and is taxed and when they both die, it is taxed again.
•Spendthrift Trust- is a trust that allows you the opportunity to let only those people benefit of the money that you think are worthy enough. In simple terms via this trust you can safeguard funds for the individuals you like, no one else can claim them.
•Living Children’s Trust- is the trust to ensure a bright future for your kids. The grantor can add clauses in it like the child will get the funds only when he turns a major etc. and till then the guardian (usually parents of the child) he appoints will take care of the children and the trust fund.
•Charitable Trust Funds- the best philanthropic idea to help the destitute throughout your lifetime and even after your death.
Once you make your mind which trust to go for, make some profound thinking as to who will be its beneficiaries and at what time, about the trustee, what exactly are the terms and conditions, the taxes by the State, should the trust be revocable or not and so forth. After all a trust is your lifetime investment…you need not take any chances!
Trust Funds For Children
Many people will associate big trust funds with their famous beneficiaries (or potential beneficiaries). Without needing to name anyone, you can probably think of a few yourself. In very many cases their massive inheritances leave huge numbers of people wondering what on earth they have done to be so lucky as to receive huge payouts, with more to come when their elderly relatives die. And yet that is just how things are. Money held in trust does not (necessarily) go into a trust fund on the proviso that the potential beneficiary behaves like a decent human being for the rest of their life. In fact, the only thing that generally governs who will benefit from a trust, and how much they will get, is the testator's own discretion – and/or that of the nominated trustee who will manage the fund with them and after their death.
This has led to money getting left in trust for some surprising beneficiaries over the years. For example, the hotelier Leona Helmsley – known by many as “the Queen of Mean” – who died in 2007 at the age of 87 from congestive heart disease – left a surprising amount of money in trust for two of her grandchildren. That amount was precisely nothing. The reason she is reputed to have given is that they did not name any of their sons after her late husband Harry. She did, however, leave an amount of $12 million to her white Maltese dog Trouble, as well as a further large amount in trust – believed to be between $5-8billion for dogs in general. Although the trust is not bound to abide by the latter stipulation, Trouble has made out pretty well from Helmsley's death, with a further stipulation stating that she will be buried next to Helmsley in the family mausoleum.
Helmsley had two other grandchildren, and they benefited from her will to the tune of $10million each – but they will lose at least half of that if they do not visit their late father's gravesite once a year. The story does not end there, however. On legal challenge, it was ruled that Helmsley was not of sound mind when she made these bequests, and as a result they were amended by the courts dependent on certain factors. The two disinherited grandchildren were paid $6million and Helmsley's own charitable foundation a further $4million. Where did this extra $10million come from? Trouble.
Because Judge Renee Roth judged that Leona Helmsley was of unsound mind when she made the original bequests, and possibly to save Trouble from becoming the first dog ever to be the victim of a constructive homicide, Roth decided that the grandchildren would be entitled to $6million as long as they maintained a media silence about their dispute with their grandmother. Trouble's caretaker, Carl Lekic, explained that $2million would be more than adequate to keep Trouble in the manner to which she was accustomed for the next ten years – and as a result, numerous death threats against Lekic were dropped.
It seems, then, that there are two lessons here to be learned. One: that you should be nice to anyone who may leave you money. And Two: Even if disinheriting your grandchildren seems like a good revenge, you may wish to undergo a psychiatric evaluation before you actually do it.
Disclaimer: This article is for informational and entertainment purposes only, and should not be construed as legal advice on any subject matter.
Both Mansi Gupta & Melissa Gordon are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Mansi Gupta has sinced written about articles on various topics from Tax, Business and Finance and Vacation. Mansi gupta writes about trust funds. Learn more at .. Mansi Gupta's top article generates over 90500 views. to your Favourites.
Melissa Gordon has sinced written about articles on various topics from Legal Matters, Patent and Trademark and Estate Planning. LegalBuffet.com is a complete online resource that compares the legal services offered by various online companies. Find the best company for your
