What is the Purpose of Your Trust?

Trusts are not just for the very wealthy. There are many different types of trusts that would benefit people of all ages and tax brackets. A recent article discusses the purpose of various types of trusts.

  • Life Insurance Trust: The purpose of a life insurance trust is to remove the value of a person’s life insurance policy from his or her estate. People chose life insurance trusts when they want to reduce their estate taxes.
  • Charitable Trust: The main purpose of a charitable trust is to contribute to a charity of the trust creator’s choosing. These trusts are also often used for tax deductions.
  • Credit Shelter Trusts: Married couples create credit shelter for the purpose of sheltering the estate tax credit of the first spouse to die. These trusts are less useful due to the federal $5 million per-person estate tax credit, as well as the portability option that allows the surviving spouse to use the unused portion of the deceased’s exemption.
  • Special Needs Trusts: Special needs trusts are created for the purposes of caring for family members with disabilities. If money is given to disabled persons outright, it may hinder their ability to qualify for government benefits. By putting assets for disabled persons in a special needs trust, they receive the benefit of your gift and remain eligible for government benefits.

For assistance in determining what type of trust would benefit you, contact us at (626) 696-3145.

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