All There Is To Know About The Family Trust
Trusts can be created by people when they are still alive or set up after they might have died. Such trusts are created in order to ensure that one’s property, which has been appropriated in the trust, is well managed and passed on to beneficiaries in line with the intention of the trust’s founder. A family trust sometimes called revocable living trust is one that has been set up while the trustor lives and such arrangement is subject to amendment or revocation by this person.
The trust is a legal agreement that you; otherwise known as the trustor or settlor give custody of part or the whole of your estate to another; the trustee on behalf of others; who are the beneficiaries. Estate in this context could include: real estate, cash, bonds, stocks, etc.
Apart from the family trust you equally have other types of trusts, which include: testamentary trust, unit trust, and charitable trust just to mention a few. The testamentary trust also known as will trust is so known due to the fact that this trust is only created upon the death of the settlor or trustor.
Alright the trustor of a testamentary trust may set up the trust such that he or she as is the case will be the trustee and beneficiary in the mean time if the state law permits this. The person may have done this so that he/she may be able to withdraw money from the trust when the need arises to so. However, this can be prevented if this person structures his/her finances well. Alternatively, this person may seek funding elsewhere for instance through life insurance settlement if the person has a life policy.
But what do I mean by a life insurance settlement? It is a financial undertaking in which one sells his life insurance policy. The policy is sold by owner to a third party; this could be an individual or corporate organization for a sum, which is above the cash value of policy and less than its asking price.
This life insurance settlement can provide seniors that do not require their policy any longer with an opportunity to receive money in exchange for their life policy by selling it to others.
In order for this to be possible the owner of such policy must qualify by meeting the following criteria. These include: being at least 60 years of age, premiums being less than 8% per annum among others. Okay going back to trusts; one advantage that a family trust has is you can bypass probate by setting this up.
However, this doesn’t make family trust right in every situation as each trust type as its rewards or benefits. In addition to this, tax breaks are not an automatic benefit with trusts as some might suppose.
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