A family trust is a trust you create to directly benefit your family members financially, explains Yahoo Finance in its article “What Is a Family Trust and How Do You Set One Up?”
The three parties involved in a trust arrangement are the grantor, the trustee and the beneficiaries. The grantor is the person who creates the trust and transfers her assets into it. The trustee manages the assets in the trust for the beneficiaries. The beneficiaries get some type of financial benefit from the trust. With this type of trust, it’s just your family members who are beneficiaries.
This is a kind of living trust and can be revocable or irrevocable. It takes effect during your lifetime. A revocable trust can be changed or terminated at any time, but an irrevocable trust is permanent. With a revocable family trust, you can be your own trustee, and name successor trustees to take control, in the event you become incapacitated or pass away. If it’s an irrevocable trust, you must designate another person to act as the trustee.
This type of trust makes certain that your property is managed according to your instructions for your beneficiaries. You can add a condition that a child can’t use the money, until they complete college or reach a certain age. You might also create this type of trust, if you have a child who needs specialized medical care.
It can also be useful in estate planning, if you want to avoid probate. Transferring the title of assets to a family trust means that they’re no longer subject to probate. You can also use an irrevocable family trust to protect assets from creditors, if you’re sued.
Speak with an experienced estate planning attorney to make certain that this type of trust is right for you.
There are several types of trust options you can use in estate planning. Some of these trusts have extremely specific purposes, while others are more general. An estate planning attorney can help you compare different trust options to help you determine if a family trust is right for your estate plan.
Reference: Yahoo Finance (March 17, 2020) “What Is a Family Trust and How Do You Set One Up?”