Sunday, August 1, 2010

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How Much Should the Property be Insured for?	Understanding Trusts
Replacement Value	Wealth Replacement Trust
Other Insurance Issues	Qualified Personal Residence Trust
Charitable Remainder Trust	Standard Policy Exclusions
Qualified Terminable Interest Property Trust (QTIP)	Charitable Lead Trust
Grantor Retained Annuity Trust	Charitable Gift Annuity

Other Trust Information

Understanding Trusts

A trust is an entity that is equally separate and apart from the individual that is establishing it.  A trust is also a separate entity for tax purposes.  A trust is created when a grantor transfers property to a trustee for the benefit of another person.  The trustee is responsible for managing the property for the beneficiary and distributing income and principal under the terms of the trust instrument.  A trustee may be given explicit instructions or may be given broad discretion to make distributions.

There are a number of different trusts that that can be used in estate planning to accomplish your specific objectives.    Properly structured, a trust can help you to reduce or avoid many of the fees and taxes that will be imposed upon your death.
Characteristics of a typical trust include:

It can be revocable or irrevocable by the grantor.
It can hold title to different types of property (in the name of the trustee).
It can serve to divide up property interests among various persons in various ways for various lengths of time.
It may avoid probate.
It can be used to achieve significant tax advantages.

Trust Terminology

Beneficiary - A person who receives or has a right to receive income or principal (corpus) of a trust.
Grantor/Settlor/Trustor - A person who establishes a trust.
Trustee - A person who holds legal title and manages trust assets.  The trustee is responsible for all the actions of the trust.
Revocable Trust - A revocable trust is a trust in which the grantor retains the right to end the trust.  Revocable trust assets are included in the grantor’s gross estate.  The transfer of assets into a revocable trust is not subject to gift tax.
Irrevocable Trust - An irrevocable trust is a trust in which the grantor relinquishes all control over the assets in the trust at the time of transfer.  Irrevocable trust assets may not be included in the grantor’s gross estate. The transfer of assets into an irrevocable trust is subject to gift tax.

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