People normally think about what would happen to their assets when they die. To have a control over what would happen, people often come up with an estate plan and the estate plan drawn out should be individualized, such that it benefits the individual’s estate goals. An important estate planning document or tool used in the New York borough of Bronx is the Trust Bronx.
A Trust is a legal document created by a person (known as the trustor), which gives another person (the trustee) the right to hold and manage the trustor’s assets until such assets are passed on to another person (the beneficiary).
For a Trust Bronx to hold, there must be these three parties i.e. the trustor, the trustee and the beneficiary. There are several types of Trust applicable in Bronx and each has its own purpose. The various types of Trust will now be listed and explained below.
1. Living trust
As the name implies, a living trust is effective during the lifetime of the individual, i.e the trustor or grantor. A living trust, also known as inter-vivo trust, is created by the grantor in order to benefit from the trust assets while alive. Although he cannot enjoy the capital, the grantor is entitled to the income and interests from the trust assets. At the event of death, ownership of the assets passes on to the named beneficiary. A Trust Bronx can be used for transferring assets to a beneficiary without having to go through the lengthy process of probate.
2. Testamentary Trust
This kind of trust is irrevocable (cannot be altered or cancelled). A testamentary trust is also called a will trust, and gives detail on how assets are to be endowed upon the beneficiary at the death of the trustor. A Testamentary Trust is instituted and managed by the executor until the trustor passes away, and then the trust assets will go to the beneficiary.
3. Revocable Trust
The revocable trust is very similar to the living trust. As the name suggests, it is revocable — that is, it can be altered, changed or terminated at anytime by the trustor. A revocable trust is used for granting protection to one’s assets during their lifetime (just like the living trust) and transferring the asset down to the beneficiaries outside of probate, at the death of the trustor. A living trust can sometimes be revocable.
4. Irrevocable Trust
As opposed to the Revocable Trust, an irrevocable trust is one that, once created, can never be altered or terminated by the trustor doing his or her lifetime. Due to its irrevocability, an irrevocable trust is more tax-efficient. It attracts very little or no estate tax when transferring the trust assets over to the beneficiaries, hence, it is most popularly used. Living trusts can also be irrevocable.
5. Charitable Trust
A charitable trust is a type of trust created such that the funds in the trust go to a charity organization at the death of the trustor, while reducing estate taxes and gift taxes. A charitable trust can also be included in a normal trust where the trustor’s family will get a fair share of the inheritance, while the rest goes to charity.
6. Credit Shelter Trust
A credit shelter trust allows the trustor to transfer an amount of assets or funds up to the estate-tax exemption. By so doing, the trustor can transfer assets to the beneficiary completely tax free, and the estate will remain tax free forever regardless of how large the estate grows in the future. A credit shelter trust is also known as a family trust or bypass trust.
7. Insurance Trust
Normally, proceeds from a life insurance policy cannot be included in a trust. With an insurance trust, the trustor is able to transfer his or her life insurance policy into the trust, and the proceeds can be used to cater for expenses before and after death. An insurance trust is irrevocable.
8. Funded or Unfunded Trusts
9. Blind Trust
A blind trust is created such that the trustees solely handles the trust, whereas the beneficiaries are kept in the dark. This may be done to avoid conflict between both parties, or between the beneficiaries.
As long as the list is, before creating a Trust Bronx, it advisable you speak with a trust attorney practicing in Bronx to get legal advise in whether or not creating the Trust will help achieve your estate goals.