Naming a Trust as Your Beneficiary

Naming a trust as a beneficiary can provide you with some benefits in estate planning. Many people do not understand trusts or how they work. Here are the basics of naming a trust as a beneficiary and how someone would go about doing this.

Purpose

The purpose of naming a trust as your beneficiary is to have some control over your assets when you die. If you have a basic will, whoever you name as your beneficiary will get the assets immediately. However, depending on what you have, you might not want to give your heirs instant access to these assets. For example, if you have a substantial amount of money and you do not want a younger heir to have access to the money until she turns a certain age, you could use a trust to help you with this process. The trust will abide by your wishes and distribute your assets as you have told them to. This makes it possible to enforce your wishes even after you are gone.

Types of Trusts

There are two main types of trusts that you could choose from. The first type of trust is called a conduit trust. With this trust, as money goes into the trust, it is immediately distributed to the beneficiaries of the trust. The beneficiaries then pay taxes on the money at their regular income tax rate.

Another type of trust is the discretionary trust. This type of trusts allows a trustee to make decisions about when to distribute the money for you. With this method, any money that is not distributed to the beneficiaries will accumulate within the trust. The trust will then have to pay taxes on the money that it holds. It will then distribute the assets at a later date to the beneficiaries.

How to Set Up

If you decide that you want to set up a trust, you will need to contact a professional in order to do so. Perhaps the best person to contact is a lawyer that specializes in estate planning. However, you could also talk to an investment professional. The professional that you are working with will be able to draw up the necessary legal documentation in order to set up the trust. Most of the time, the process to set up a trust will not take long. You will have to sit down and determine which assets you want to leave to the trust.

You will need to make sure that the professional goes over all of your options with you. You need to determine if a trust set up is legal in your particular state. You also need to take some time to determine who would be the best person to administer your trust. You want someone whom you can count on and who you believe will make the best decisions for you. Once you have completed the process, you can rest easy knowing that your assets will be distributed according to your desires.



Abeyance



Abeyance is a legal term that is used to describe property that does not necessarily have an owner yet. The ownership of the property has not been determined, and it will generally be determined by some type of future occurrence. When the specified future occurrence happens, then the ownership of the property will be transferred to the new owner. 

This is a common occurrence with many types of trust funds. For example, many wealthy parents do not wish to give a large amount of money to one of their children right away out of fear that he or she will waste the money. Because of this, they may decide to put stipulations on the trust money that must be met before the child can have access to it. The child may have to turn a certain age or graduate from college first. 

This term can also be used to describe a situation in which someone leaves some type of asset to an individual who has not yet been born. This is a common occurrence with people who want to leave some type of inheritance to their grandchildren that have not yet been born. When a grandchild is born, he or she will become the rightful owner of the property.

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