A trust fund is an important monetary planning tool that enables a person to outline how their hard-earned wealth shall be processed after their death. Every person works hard to provide for their family and is always worried about how they can keep protecting them from financial woes when they are no longer with them.
Although the basic motive of a trust fund is to rid the benefactor of these worries, there are still some variations in the different types of trust funds. These differences are intended to ensure that each individual can benefit from the asset plan according to their specific requirements. Some of the more common types of trust funds are described below:
1. Revocable Living Trust
A revocable trust fund simply refers to a living trust that can be withdrawn at any point in time. Revocable trusts are one of the most popular and common types of trust funds around today. The grantor in a revocable living trust is able to transfer all of the desired properties into the trust and can nominate themselves as both the trustee and beneficiary. This unique feature allows the original benefactor to sustain maximum control over all of their properties.
The person can also decide the inheritance terms that shall be applicable on this type of trust funds once the trustor passes away. A well documented revocable living trust agreement that can be generated with the help of a professional wealth planning firm can facilitate the trustor in avoiding probates and also save time and expenses.
2. Special Needs Trust
This is a special type of trust funds which is created especially for adults and children with disabilities. In case parents or any other family member wants to secure the future of someone who is not able to do it themselves because of any disability, they can do it by implementing a special needs trust fund.
Similar to most types of trust funds, the trust owns and regulates the property and its distribution. However, the wealth given to a person with special needs doesn’t override their claim to receiving government benefits such as social security income.
3. QTIP Trust
Another popular type of trust funds which is mostly deemed attractive for people with large families. Most people who own the home in which they have more relatives living, usually want to ensure that their spouse gets to live in the house after their death. This means that no other relative can banish them from the home. However, the spouse cannot sell the home under any circumstance and can only live in it for as long as they are alive. After the spouse dies, the home shall be inherited by their children.
The above types of trust funds make it even more convenient to plan for the future of their wealth and better secure the family. For those who are still confused about the type of trust fund best suited for them can contact their nearest wealth planning agency for a more professional and legal guidance.