Trusts

Trust are very powerful and effective devices with regards to estate planning. Today, trusts are not just used by the very wealthy. People with a wide variety of income levels use them as estate planning tools too.

Trust are very different from a Will.

What is a Trust?

A trust is often its own entity. A trust may own assets (holds the title), operate a business, and manage property. It may even have its own EIN federal identification number similarly to an Individual having a social security number.

A trust may be created during one's lifetime. This is called an in vivos or living trust.

On the other hand, a trust may be created under a Will and become operable after a person's passing. This is called testamentary trust.

There are basically two types of trusts:

An irrevocable trust is, again, a separate entity, for both legal and tax purposes, and pays its own taxes. The irrevocable trust cannot be revoked or changed after it is established.

A revocable trust is not considered a separate entity for tax purposes, although it may be considered a separate legal entity.

The revocable trust can be changed or revoked (taken back) by the creator (grantor) of the trust.