How to Find Out If You Have a Trust Fund in Your Name?
Trusts are legal entities that provide financial, tax, and legal protections for individuals. They require a grantor who sets up the fund, one or more beneficiaries who receive the assets when the grantor dies, and a trustee who manages and distributes the assets at a later date.
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Using a trust can help you avoid probate or other costly estate taxes, protect assets from creditors, and control how your heirs spend their inheritances to reduce the risk that they “blow it” on expensive vacations, cars, gambling, and other activities. In addition, trust can be an effective way to ensure that your wishes are carried out after you die.
Types of Trusts
A trust can be a powerful tool for estate planning purposes, and many people choose to use them. While some types of trusts are more popular than others, all of them offer a number of benefits.
The main benefit of a funeral trust is that it can be used to set up prepayments for funeral-related expenses, such as a burial, transportation, grave-site marker, or mausoleum. Depending on the size of your estate and your wishes, you may want to consider setting up a trust for your funeral funds.
A children’s trust can be useful if you want to make gifts of funds to your minor children. It’s important to consult with a trust attorney to determine which type of trust would be best for your situation.
If you have a large family, a generation-skipping trust can be an effective way to minimize death taxes for your heirs. The income from the trust is distributed to a child or children at least 37 years old, thereby reducing the amount of death tax owed on your estate.
Life insurance and annuity contracts: You can change the ownership of these contracts from your name to a life insurance trust or a retirement income account. In these cases, you will need to complete a transfer of ownership form with the insurance company.
Medical savings accounts and other health-care accounts: You can name the trust as a primary or secondary beneficiary to ensure that the money transfers to the trust upon your death. However, it’s important to note that you can’t transfer these accounts directly to your living trust.
Bank and brokerage accounts: It’s usually easier to keep these accounts separate from your trust, as they can be subject to long probate processes when you pass away. If you do choose to transfer these assets, be sure to designate the trust as a beneficiary to avoid the need for long probate and the time it takes to convey them to your heirs.
Retirement accounts: Like medical and life savings accounts, retirement accounts are generally best kept out of a living trust. In these cases, you can name the trust as a primary or second beneficiary to prevent your heirs from withdrawing funds and potentially triggering income taxes.
Active financial accounts: It’s best to keep these accounts separate from your trust. This can be done by updating the title to your trust or transferring them to the trust via a designated beneficiary.