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Eco-Nomics ››
Living Green, Affordably ››
Life of a Dollar ››
Tax Reduction ››
Trusts
Trusts
A trust is an agreement whereby legal title to money and/or assets (called principal or corpus) is
transferred from a grantor (the creator of a trust) to a trustee, who has a fiduciary responsibility
to manage the trust according to specific instructions in trust documents, for the benefit of another
or others (i.e., beneficiaries). Many assets can be held in trust, including real estate, money, cars,
life insurance, health insurance, stocks, bonds, notes, etc. Trust agreements are usually drawn up by
a lawyer who specializes in trusts and estate planning, who may charge as little as a few hundred or
as much as several thousand dollars. Trusts seem to be one of the best forms of asset protection and
estate planning as of yet, however each trust is different and every state has different laws regarding
trusts, so due diligence is an absolute must.
Trust Purposes
There are many different types of trusts and purposes for their use. If structured properly, they
can be used in place of a will to avoid probate, and they can be an excellent method of asset protection,
estate planning, gift and estate tax reduction. Trusts are also often used for privacy purposes because
they are recorded in the name of the trust rather than the name of grantors or beneficiaries, and trustees
cannot disclose the names of grantor or beneficiary/ies of a trust without a court order. This greatly
reduces the possibility of losing trust income and/or assets to creditors, liens, lawsuits, judgments,
seizures and even legal land theft, because
information such as the name of the owner or grantor is required for any of these processes to begin. If the
name of owners, grantors, trustees and beneficiaries is unknown and unrecorded, it can be very difficult,
expensive and time consuming to get this information. Not many are willing to spend the extra time and money
trying to connect trust assets to you, to determine the value of trust assets and whether or not it is sufficient
to pay for their efforts. Even if this information is found, the trust is still not recorded in the name of grantors
or beneficiaries, so technically trust income and/or assets are generally not considered property of the grantor
or beneficiaries (unless it is a grantor trust)... and what you don't own cannot legally be taken away from
you for any reason. Holding assets in trust has little if any effect on income and capital gains taxes however;
anyone (other than tax exempt organizations) receiving income and/or assets from a trust is held liable for all applicable
income and capital gains taxes (at their own rates), including trustees, grantors and beneficiaries.
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