Trusts - What are the Major Types of Trusts Available?
Different Types of Trusts
Living Trusts or Inter Vivos Trusts
There are three major types of trusts out there. Living trusts, also known as inter vivos are trusts that are set up while you are alive (which should go without saying). You can often be the trustee and serve in that capacity or you can name another person to do that for you. When you do die, the assets of the trust distributed out directly to your beneficiaries.
There is a standard form that you can use to set up your own living trust, however just know there are some pretty serious legal pitfalls that can cause some trouble for you. For instance, no one wants the hassle of dealing with the costs of probate. If you should have a poorly executed trust, this can ruin your whole attempt to avoid that very hassle and cost of probate. So just be very aware and fully in the "know" before you jump in with both feet.
Testamentary trusts are unique in that they are created by your will and wishes after you die. These are funded by your estate, and administered by the trustees. Your trustees are named in your will as well.
Pour Over Trusts
Pour over trusts really combine some of the above two different types of trusts. Pour over trusts are established while you are alive specifically to receive assets (like the benefits of life insurance) which are paid at your death. Your will will have all the details.
A Blind Trust
Blind Trusts fall into their own category, and basically mean you have no information about, nor do you influence any of the decisions that the trustee makes. These are used by politicians to protect themselves from different charges and of course conflict of interests.
A great way to Maintain Income for your Loved Ones
So Trusts are a wonderful way to help maintain some steady income for your loved ones. They can help people get on their feet, or help those that can't fend for themselves. It's a way to have reassurance that they will be taken care of financially, which is a wonderful and very thoughtful gift to give to them.