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 trust, while listing 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.
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