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What is a trust? Not just a tool for the ultra-rich

In estate planning, it can be helpful and very beneficial to have lawful protection of assets in writing. This can be done in the form of a trust. In California, trusts often have a reputation as a tool for the wealthy. However, anyone can use trusts to provide a better future for loved ones and ensure asset protection. Trusts can be confusing, as several different types of trusts exist.

Trusts are usually composed of three parties: the trustor, trustee(s) and the beneficiary. There are five main types of trusts. The trustor is the person who grants control of assets and property to the trustee, who is then responsible for managing the assets. Just as the name implies, the beneficiary will receive the benefits of the trust.

There are several different types of trusts. A living trust is made while the trustor is alive and allows the individual to use the benefits while living. When the trustor dies, the assets will be passed to the beneficiary. In a revocable trust, the trustor can alter the trust during the individual's lifetime. The opposite is true of an irrevocable trust, which cannot be altered until after the trustor's death.

A charitable trust is a trust that benefits a charity. A credit shelter trust, sometimes known as a family trust, allows the trustor to give his or her estate to a family member tax free. In an insurance trust, the trustor can combine the trust with a life insurance policy, which would keep it from accruing taxes against the estate.

Although there are dozens of trusts, each has unique purposes and features. Obviously, with so many types, trusts can be confusing. A trust is basically just a vehicle to pass along assets from one party to another. California residents who have questions regarding trusts or estate planning could benefit from discussions with an experienced legal representative to help guide them through this process.

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The Law Office of Araceli Tovar, APC

251 Madrona St.
Chula Vista, CA 91910

Phone: 619-869-4200
Fax: 619-869-4202
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