There are two main types of trusts, revocable and irrevocable. As you might suspect, a revocable trust can be revoked and the property recovered. The same is not true of an irrevocable trust. There are also traditional trusts and constructive trusts, the latter being a legal fiction ordered by a court to protect assets from someone who would otherwise unjustly gain from them.
What are the Basic Types of Trust?
Once you get beyond the revocable versus irrevocable trust, specific types of trusts are used for different reasons. Some of the more common trusts are:
- Asset Protection Trust
- Charitable Trust
- Special Needs Trust
- Spendthrift Trust
- Tax By-Pass Trust
- Living Trusts
- Testamentary Trusts
- Qualified Domestic Trust
Living Trust
A living trust is one in which the person who puts the property in the trust sets up a trust with himself or herself as the beneficiary of the trust. The trust is used most commonly for estate planning and tax purposes.
Charitable Remainder Trust
A charitable remainder trust allows a donor to contribute property to a charity while continuing to profit from the assets during the donor’s life. The donor irrevocably gives cash or other property to a trust while receiving an income stream from it for a period of years or for life. At the donor’s death, the named charity receives the remaining trust assets. This trust is a commonly used device for reducing the taxable income of the donor.
Call Us Today to Speak with a Trust Lawyer in South Carolina
If you are considering creating a trust, you should consult with an experienced trust attorney as soon as practicable. Schedule your appointment with Parker Law. Contact us or call our offices today at 803-918-5164.
Trust FAQs
What is a special needs trust for?
A special needs trust is (SNT) a legal arrangement set up for someone who cannot manage the assets in the trust. If the assets originally belonged to the beneficiary, it is a first-party SNT; if not, it is a third-party SNT. Third-party SNTs are usually funded at the death of the parents or other individuals who had custody over the individual with special needs. A third-party SNT can also be a stand-alone trust to allow for property being received from multiple parties.
Can a Living Trust be changed?
Yes, living trusts are all revocable trusts in which the terms can be changed at any time. These trusts become irrevocable when one or more of the beneficiaries dies, as in a marital living trust where one spouse dies.
What Is a Spendthrift Trust?
A spendthrift trust is a trust set up to prevent the beneficiary of the trust from selling or otherwise alienating the beneficiary’s interest in the trust principal. The beneficiary also cannot promise trust property to anyone else. The trust, thus, allows the beneficiary to receive some benefits from the trust property but protects the property from claims by the beneficiary’s creditors.