2nd October 2019

cnn

13

What are the benefits of having a trust?

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Among the chief advantages of trusts, they let you:

Put conditions on how and when your assets are distributed after you die;
Reduce estate and gift taxes;
Distribute assets to heirs efficiently without the cost, delay and publicity of probate court.
Better protect your assets from creditors and lawsuits;

Also, what is the use of a trust?

A trust is traditionally used for minimizing estate taxes and can offer other benefits as part of a well-crafted estate plan. A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.

Why would you set up a trust?

Once you place assets in the trust, they are no longer yours. They are under the care of a trustee. A trustee is a bank, attorney or other entity set up for this purpose. Since the assets are no longer yours, you don't have to pay income tax on any money made from the assets.

What is the purpose of a living trust?

A living trust (sometimes called an "inter vivos" or "revocable" trust) is a written legal document through which your assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a "successor trustee."

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Who owns the property in a trust?

To create a trust, the property owner (called the "trustor," "grantor," or "settlor") transfers legal ownership to a person or institution (called the "trustee") to manage that property for the benefit of another person (called the "beneficiary"). The trustee often receives compensation for his or her management role.

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Is it better to have a will or a trust?

Wills and Trusts are both estate planning documents used to pass assets on to beneficiaries at death. Here are five ways in which a Trust is better than a Will to pass your estate to your beneficiaries. A Trust can be used to Avoid Probate – a Will cannot.

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How a trust is taxed?

Generally, taxes on taxable income must be paid either by the trust or by the beneficiaries, but not both. If the trust retains income beyond year-end, then the trust must pay taxes on it. However, if the income is distributed, then the beneficiaries pay taxes on it and the trust is permitted to deduct it.

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How much does it cost to set up a trust?

Attorney's fees are generally the bulk of the cost associated with creating a trust. The cost for an attorney to draft a living trust can range from $1,000 to $1,500 for individuals and $1,200 to $2,500 for married couples. These are only estimates; legal fees vary based on the attorney and the circumstances.

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How does a trust work when someone dies?

Closing a trust after the grantor's death is much like probating his will. When a decedent leaves a will, he names an executor to gather his assets and disperse them to his named beneficiaries. They're usually paid by his probate estate from the cash and assets he did not transfer to his trust during his lifetime.

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Why have a family trust?

Benefits of a family trust. People usually set up a family trust to get some benefit from no longer personally owning an asset. A family trust may be useful to: Protect selected assets against claims and creditors – for example, to protect a family home from the potential failure of a business venture.

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How much does it cost to do a living trust?

If you are willing to do it yourself, it will cost you about $30 for a book, or $60 to complete your living trust online. If you hire a lawyer to do the job for you, get ready to pay between $1,200 and $2,000.

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What is the purpose of a living revocable trust?

A revocable living trust is a popular estate planning tool that you can use to determine who will get your property when you die. Most living trusts are “revocable” because you can change them as your circumstances or wishes change. Revocable living trusts are “living” because you make them during your lifetime.

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Why do you need an irrevocable trust?

Another significant benefit of an irrevocable trust is that it provides substantial protection from creditors. Once assets are transferred to the trust, they no longer belong to the grantor, rather, they become the legal property of the trustee to hold for the beneficiaries.

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What is the difference between a revocable trust and an irrevocable trust?

Not being able to revoke the trust is part of a trade-off that comes with several other benefits. The simplest difference between the two is that assets remain in the grantor's estate in a revocable trust but move out of the estate in an irrevocable trust.

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How do you set up a family trust?

Steps

Decide who will be the Trustee. The Trustee is the person in charge of the assets in the trust.
Determine who the beneficiaries will be.
Decide what assets you will put in the Trust.
Create your Trust Document.
Execute the Trust document.
Transfer assets to the Trust.

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How a trust can cut taxes?

You transfer an asset to the trust, which reduces the size of your estate and saves estate taxes. But instead of paying the income to you, the trust pays it to a charity for a set number of years or until you die. After the trust ends, the trust assets will go to your spouse, children or other beneficiaries.

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What does it mean to have an irrevocable trust?

An irrevocable trust can't be modified or terminated without the beneficiary's permission. The grantor, having transferred assets into the trust, effectively removes all of his rights of ownership to the assets and the trust. This is the opposite of a revocable trust, which allows the grantor to modify the trust.

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Why do you have a revocable trust?

A revocable trust is considered a more effective estate planning tool than just a Last Will and Testament for several reasons. A revocable trust gives the grantor an orderly way to distribute their assets upon their death and privacy for themselves and their heirs during the process.

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What does it mean to have a living trust?

A living trust, also called an inter vivos or revocable trust, is an estate planning tool increasingly used by individuals and families of all income brackets as a way to pass on property while generally avoiding costs and delays associated with probate.

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What does it mean to have a trust fund?

A trust fund is a fund comprised of a variety of assets intended to provide benefits to an individual or organization. A grantor establishes a trust fund to provide financial security to an individual, most often a child or grandchild, or organizations, such as a charity or other nonprofit organizations.

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Do I need a will or a living trust?

If you have a living trust, your will would typically contain a pour over provision. Such a provision simply states that all such assets should be transferred to the trustee of your living trust after your death. (This does not mean, however, that your beneficiaries can avoid going through probate for these assets.)

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How do you avoid probate on a will?

Here are some basic tips to keep more of your estate in the hands of the people who matter most.

Write a Living Trust. The most straightforward way to avoid probate is simply to create a living trust.
Name beneficiaries on your retirement and bank accounts.
Joint Tenancy with a Right of Survivorship.

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How does a trust come to an end?

The first and easiest way a trust can end is that the trust property is exhausted. If the trust property was cash or stocks, this can happen when all of the money, plus interest, gets paid to beneficiary. Indeed, trusts can and do end when the grantor specifies an end date or condition, and that condition is met.

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What is the definition of a living trust?

A living trust is a trust that is created during your lifetime. In other words, while you are still alive, you transfer title to your property from your name to that of the trustee of the living trust.

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