Using Trusts To Save Money

By on August 17, 2014

Using Trusts To Save Money

The world of understanding assets may be overwhelming to some, as the process deals with many legal guidelines and many papers that require filing.

Most of the time, we sign papers or converse with professionals that we believe are doing their job correctly, but sometimes we are left unsure.

If you feel this way, don’t worry you are not alone, as many feel the same way.

However, building a trust through a grantor can be one of the best decisions you make in your life. If you understand how a trust works, and how to create a fitting system, you have the ability to save a lot of money!

What Is A Trust?

what-is-a-trust

A trust is a legal arrangement, in which a amount of property or assets is held by one party, in terms of benefiting one or several people belonging to a different party.

Usually, a trust is split up into four different categories.

  1. The first category is the grantor, sometimes called settlor, who deals with the creation of the trust.
  2. This then creates a trustee, or the person who will hold the assets, most of the time it is a bank, or a named entity. Sometimes, a grantor and a trustee may remain as the same person, having the person who creates the trust as the handler of the trust also.
  3. The principal is the third category, and this deals with the certain property or assets that is being handled. This can be money, or property, or a combination of both.
  4. Finally, the beneficiary wraps up the trust categories, marking the party who will receive the assets or property, this last category usually deals with the case in which the original owner dies, and the trust isn’t put into the will.

How Do Trusts Work?

There are four different types of trusts:

  1. Named Living
  2. Testamentary
  3. Revocable
  4. Irrevocable

These trusts are similar, but some details separate them.

Many people choose trust creations because of the potential benefits of saving money.

Trusts usually help save on estate taxes, can help control your assets in case of your demise, like decline in health or mental capability, and can help avoid a probate.

Probate is the process in which a will is verified, a process that can sometimes turn ugly and may require a lengthy period of time to validate.