Different Trusts for Special Purposes - Money Management
Qualified Terminable Interest Property Trust
Trusts are a great source of income for the beneficiaries, whoever they may be. Some people enjoy the multiple choices out there that allow for you to make plans for the future while still having some control and "say" over your money and how it will be utilized. Below are some different trusts that differ from Living Trusts, Testamentary Trusts, and Pour-Over Trusts and some details that make them different.
A Qualified Terminable Interest Property (also known as a QTIP) trust leaves your estate to our spouse, but it also lets you control its disposition after your spouse dies. So your spouse will receive the trust income, but can't use the principle. Your spouse also can't change the beneficiaries that you have designated. So this trust allows for a lot of control, while getting your desires accomplished.
A bypass trust is often also called an exemption equivalent trust. This trust will pay your surviving spouse the income from the trust, while the trust itself is not part of his or her estate. This way, when your spouse dies, the assets pass on down to your heirs. There are no estate taxes that are due, and this is true even if value of the accumulated amount exceeds 600,000 dollars. This trust allows for two tax exemptions where normally there is only one. It is a pretty powerful trust.
Life Insurance Trust
A Life Insurance trust is set up to own your own insurance policy. The death benefit that is paid to the trust avoids estate taxes and probate.
Charitable Remainder Trust
Charitable Remainder Trust
A charitable remainder trust eventually goes to a specific charity. This trust has a double advantage of a lifetime income from the trust's investments for you or your beneficiary. It has tax deductions also for the year you contribute to the trust. At your death, or that of your beneficiary, the rest of the principal goes to the charity. Its a neat way to think of your loved ones, and be giving to a charitable cause. See the video to see who would be best suited to use the Charitable Remainder Trust. This is a great trust, because many people "win" using this scenario.
Charitable Lead Trusts
A Charitable Lead Trust
A Charitable Lead trust is involved with a particular charity. This charity receives the income that is generated by the assets of the trust for the entire length of that trust. An interesting twist is that when the trust's term ends, the remainder goes back to your heirs. Based on Internal Revenue Service tables, you can value the gift at a reduced rate. This can save you on estate taxes since the benefit to one's heirs is a delayed benefit.