Although many people may believe that setting up a trust is more likely to benefit those who are very well off, it may still offer certain benefits to families with only more modest assets. A trust can be established as part of a will or can take effect at any time during life. An important reason for setting up the living trust is to hold certain assets for the beneficiaries at a young age until they can take full control. A trust is designed to accept a variety of assets for reasons related to bankruptcy or divorce.
Here are some of the main types of trusts available:
Liferent Trust
If an annuity trust is established, this type of arrangement is intended to allow the beneficiaries to benefit from the contents of the trust during their lifetime. And later, the assets held in a trust would be passed back to a chosen beneficiary due to a declaration made requesting to pass the benefits to another family member or individual. Alternatively, a trust would be passed due to the death of the life tenant. A common situation for using this type of trust relates to letting a spouse live in a home for life and ensuring that upon death the home passes to the children. One point to note with this type of trust is that it cannot offer any form of inheritance tax savings.
discretionary trust
A discretionary trust is intended to give the trustees the ability to have full control over the contents of the trust, giving them the ability to say when and how the funds can be paid to the beneficiaries. A type of trust can include buildings, land, or money. Often the trustees who control these trusts will have discretion regarding the investment or use of the assets. Also, if a trust relates to multiple beneficiaries, the trustees can say how the funds are divided among the individual recipients. The amount of discretion allowed in a trust is likely to relate to the original terms outlined in the trust agreement.
trust for children
Another option relates to trusts that are especially intended for the younger person who is not yet old enough to take control of the contents of the trust. Additionally, they could be used for disabled or vulnerable children who are likely to require some assistance managing finances.