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An overview of common trusts

The use of a trust may make it easier for California residents to exercise control over their assets. The use of a marital trust may be appropriate when an individual has children from previous marriages. The use of a bypass trust may ideal for those looking to maximize their lifetime estate tax exemption.

Individuals who are looking to donate to charity may also benefit from the use of trusts. A charitable lead trust provides a charity with a set amount of money with the rest going to a beneficiary. Charitable remainder trusts provide an individual with an income while alive with whatever is left in the trust going to a designated charity when the donor dies. If a child or another family member has special needs, a special needs trust may provide resources without jeopardizing eligibility for government benefits.

Life insurance trusts may remove death benefits associated with such a policy from an estate. Typically, this death benefit counts toward the value of the estate. By putting it in a trust, it generally is not taxable when the insured dies. While such a trust may benefit anybody, it is typically used by individuals with a higher net worth as the savings could be substantial.

There are many reasons why a person may wish to set up a trust. However, there may be costs and other requirement associated with creating it that may not make a trust the best option for an individual. Those who are considering using such estate planning documents may wish to consult with an attorney prior to using it. This may make it easier to both determine if it is appropriate and increase the odds that it is created properly. Otherwise, its validity may be challenged at some point.

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