A lot of people do not understand the fact that there are many different types of trusts that can be used when you are planning your estate. The primary reason why should work with an estate planning attorney is to become apprised of your options so you can make informed decisions.
With this in mind, in this post we will look at five unusual trusts that you may be learning about for the first time.
Secret and Semi-Secret Trusts
The first trust that we will look at is the “secret trust.” Let’s say that John has supported a significant other outside of wedlock for many years. He wants to leave her an inheritance, but he does not want the rest of the family to know about it.
John does confide in his brother, Bill, and he asks him to be the trustee of a secret trust. Bill is named as an inheritor in the will, but in actuality, the assets are to be used to fund a secret trust for the benefit of the paramour.
This approach can also be taken in a semi-secret manner. A will would openly call for the creation of a trust, but all the terms would be secret.
These trusts are usually not recommended by estate planning attorneys because of the potential for estate litigation. When the arrangement is made in the shadows, the family members that were not informed can make the case that the secret trust is not legally binding.
Totten Trust
When you open up an account at a bank or a brokerage, you can name a beneficiary that would inherit the resources after your death. It should be noted that they would have no access to the funds while you are living.
These are called payable on death or transfer on death accounts, and the alternate term for this type of account is a Totten trust.
The transfer to the beneficiary would not be subject to the process of probate, which is a public proceeding. As a result, the transfer would be strictly confidential, so someone like John would do well to consider the utilization of a Totten trust.
Blind Trust
Some executives that are subject to securities regulations convey assets into blind trusts. As the name would indicate, the grantor of the trust is essentially blind to the actions that are taken by the trustee. These trusts are also utilized by people that hold political offices.
Rabbi Trust
Another type of trust that can benefit an executive is the rabbi trust. It should be noted that the involvement of an actual rabbi is not necessary. The trust got its name because the first time the IRS approved of its utilization, the beneficiary was a rabbi.
A rabbi trust is funded by a company that is providing compensation to an employee. They receive a tax deferral benefit when a portion of their compensation is conveyed into the trust.
Funeral Trust
Some people want to spend freely during their retirement years, and they do not prioritize the inheritances that they will leave to their family members. At the same time, they want to make sure that they have set aside resources to cover their funeral expenses.
Under these circumstances, an individual could fund a funeral trust. They would work with a funeral home that offers this option and fund the trust while they are living. After they pass away, the assets would be used to cover their final expenses.
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Our attorneys are conducting a series of estate planning seminars over the coming weeks, and you will walk away with a great deal of valuable knowledge if you attend one of these sessions.
There is no charge, so this is a convenient way to invest a little bit of spare time. You can see the dates if you visit our seminar page, and when you identify the session that works for you, follow the instructions to register.
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If you have already decided it is time for you to work with a Glastonbury or Westport, CT estate planning attorney to put a plan in place, our doors are open. You can send us a message to request a consultation appointment, and we can be reached by phone at 860-548-1000.
Mr. Horowitz was awarded his Juris Doctor degree with honors from the University of Connecticut School of Law. While attending law school, Mr. Horowitz received the American Jurisprudence Award in Legal Ethics and the Nathan Burkan Award.
After graduation from law school, Mr. Horowitz continued his legal education at New York University School of Law where he received a Post Doctorate Law Degree in Taxation. He has also recently received a national achievement award.
Mr. Horowitz is admitted to practice before all the state courts in the State of Connecticut and the United States District Court.
Mr. Horowitz was selected for Super Lawyers in 2021.