What is Trusts

Revocable Trusts

• A revocable trust also called a living trust, is created during the lifetime of the trustor.
• The trustor can also add or remove assets from the trust as they see fit.
• The trustee (the person or institution responsible for managing the trust assets) is usually the trustor themselves or a trusted individual or institution chosen by the trustor.
• Assets held in a revocable trust are generally not subject to the probate process upon the trustor's death, which can help avoid delays and costs associated with probate.
• The trustee has a fiduciary duty to manage the trust assets in the best interest of the beneficiaries, which are often the trustor and their designated heirs.
• A revocable trust can include provisions for the management of the trustor's assets if they become incapacitated or unable to make financial decisions.
• Living trusts, also known as revocable living trusts, are a type of trust that is established and becomes effective during the lifetime of the person creating the trust, known as the trustor or grantor.
• Trusts that are created and become effective during the trustor's lifetime. Testamentary Trusts: Trusts that are established through a will and become effective upon the trustor's death.

Irrevocable Life Insurance Trusts

• Assets held in an ILIT, including the life insurance policy and its proceeds, are not considered part of the grantor's estate. This can help protect the assets from creditors, lawsuits, and estate taxes.
• When structured properly, the life insurance proceeds held in an ILIT are generally excluded from the grantor's taxable estate, potentially reducing estate taxes upon the grantor's death.
• The grantor can designate specific beneficiaries to receive the life insurance proceeds, and the trustee (the person or institution managing the trust) has a fiduciary duty to distribute the funds according to the trust's terms.
• The life insurance proceeds held in the ILIT are generally protected from the creditors of the grantor and the beneficiaries.
• An ILIT can include provisions for the management of the life insurance policy if the grantor becomes incapacitated, ensuring the policy continues to be maintained and the beneficiaries are protected.

Charitable Trusts

Charitable trusts are a type of trust that are specifically designed to benefit one or more charitable organizations. There are several different types of charitable trusts, each with its own unique features and tax implications.

Most common types of charitable trusts:

1. Charitable Remainder Trusts (CRTs):
   1. A charitable trust is established during the grantor's lifetime
   2. A CRT allows the trustor to transfer assets into the trust, which then pays a lifetime income stream to the trustor or designated beneficiaries. Upon the death of the income beneficiaries, the remaining assets in the trust are distributed to one or more charitable organizations.
   3. CRTs can provide the trustor with tax deductions and other tax benefits.
   4. A donor-advised fund is a type of charitable investment account that allows the donor to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time.
   5. Establishing a private foundation can provide tax benefits and allow the donor to maintain a degree of control over the charitable giving process
2. Charitable Lead Trusts (CLTs):
   1. In a CLT, the trust makes periodic payments to one or more charitable organizations for a specified period of time. After the charitable payments have been made, the remaining assets in the trust are distributed to the trustor's designated non-charitable beneficiaries, such as family members.
   2. CLTs can be used to reduce the impact of estate and gift taxes on the transfer of wealth to non-charitable beneficiaries.
   3. A charitable trust is established during the grantor's lifetime