Trust Funds Guide

Trust Funds Guide



Trust funds guide
A Trust is​ perhaps the best channel to​ keep your money and other assets safe and secure for your future generations .​
It is​ a​ lawful creation that isolates your money for specific reasons .​
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!




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