Estate Planning Resources

5 Basic Types of Trusts

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A trust is the arrangement of a third party (trustee) to hold specific principal (assets, property, and finances) left by a grantor for a designated beneficiary. Knowing the basics of trusts is essential for future estate planning, especially after death.

When, where, and with whom are the three main questions forming a trust answers.

When Are Trusts Used

Trusts are often used to:

  • Limit spending by specifying how money can be withdrawn and used
  • Set aside funds for a specific purpose (such as college tuition, mortgage, or medical bills)
  • Protect finances for children and grandchildren until they are financially responsible or reach the age of majority
  • Transfer assets between various parties
  • Provide charitable donations and funding

A trust becomes obsolete when the assets are paid in full to the beneficiary. It also ends whenever the trust specifies, such as when the beneficiary turns 21, finishes school, etc.

Who Can Be a Trust Beneficiary

Anyone can be made a beneficiary of a trust by the grantor. Often included are spouses, children, grandchildren, and other relatives. A trust can also be used to make donations to charitable organization. In certain situations, the grantor may name themselves a beneficiary.

Trusts for Your Financial Well-Being

Before placing all of your estate into a trust, decide on which type best fits you, the beneficiary, and the assets themselves.

There are 5 basic types of trusts:

  1. Revocable – A revocable trust, also known as a living trust, can be altered anytime while you’re still living. Taxes are still attached to this trust, but it’s far more flexible compared to an irrevocable trust.
  2. Irrevocable – An irrevocable trust passes out of taxes and probate; however, it cannot be changed after the passing. You, the grantor, lose control of our own trust, even before your death.
  3. Testamentary – This type of trust is summarized in your will, and officially carried out after death. The assets are unfortunately subject to probate and taxes, slowing down the distribution process.
  4. Marital – A marital trust centrally focuses on benefiting the surviving spouse; however, the trust is still included in the taxation of the spouse’s estate.
  5. Bypass – The trust is exempt from federal estate taxes, passing the surviving spouse’s estate in order to do so.

Consult one of our knowledgeable attorneys at Angermeier and Rogers for extra guidance to ensure you know all trust options before moving forward. Being financially prepared is your best defense against the unknown.

Trustworthy Benefits You Can Bank On

A trust reaps several benefits for the grantor, as well as the beneficiary. Controlling where your assets end up after death is your business and should be done your way. Take advantages of what a trust has to offer, including:

  • Gives grantor absolute control of asset distribution
  • Saves money on court fees and estate taxes
  • Quicker distribution of assets to beneficiary
  • Avoids probate
  • Can be created in several different ways

Attorneys with a Muscle for Trust Planning

Milwaukee’s Angermeier and Rogers focuses solely on your family, future, and financial security. We care about our clients, treating them as actual people with unique challenges and different views for the future.

Our estate planning lawyers walk you through the process of setting up a trust and personalizes our services for your needs. Visit one of our offices in Cedarburg, Milwaukee, or Brookfield for more information about trust administration, retirement planning, and Medicaid.

Contact our family trust attorneys at Angermeier and Rogers today.