Posted on August 23, 2006 at 16:56:29:
A trust is a legal entity that holds property designated by the grantor for the benefit of named individuals or charities, to be managed as the grantor specifies. Trusts can be designed to reduce probate or estate taxes, too.
A bypass trust allows certain assets to bypass a spouse’s estate, going instead to the children or other heirs. Often the income on the assets is used to support the spouse. A living trust can avoid probate on certain properties. It is revocable and controlled by the grantor until his or her death, when it becomes irrevocable.
A special-needs trust can provide for a child with a physical or mental handicap. It must be carefully structured so the child can continue to qualify for government benefits. A spendthrift trust protects assets from a beneficiary’s irresponsibility – or his creditors. A life-insurance trust is set up to own a policy on the grantor’s life, keeping the proceeds out of his estate.