A family trust is a specific type of trust that families can use to create a financial legacy for future generations. There are several benefits to creating one, including ensuring your family members receive your assets, property and belongings.
In a family trust, there are three parties: a grantor, a trustee and the beneficiaries. The grantor is the person who makes the trust and transfers their assets into it. The trustee is the person who manages the assets in the trust on behalf of the beneficiaries. The beneficiaries are the individuals who receive some type of financial benefit from the trust.
A family trust has only family members as the beneficiaries. So that means your children, grandchildren, siblings, aunts and uncles, cousins, nieces and nephews, even parents – any family members you choose to list as beneficiaries. Family trusts can also include spouses.
This type of trust is a living trust and it can be revocable or irrevocable, depending on your wishes. A living trust is a type of trust that takes effect during your lifetime. A revocable trust can be altered or terminated at any time. An irrevocable trust is permanent. With a revocable family trust, you can act as your own trustee, naming successor trustees to take over the reins if you become incapacitated or pass away. With an irrevocable trust, you must name someone else to act as the trustee.
Reasons to Create a Family Trust
- If you have a child or other family member who requires specialized medical care, since placing assets in a trust can exclude them from Medicaid eligibility guidelines.
- If you want to specify terms or age limits for your beneficiaries. You may include a stipulation in the trust agreement that your children won’t receive any of the money until they complete college or reach a designated birthday, such as 30.
- You can use a family trust to insulate assets from creditors in the event that you’re sued.
- You want to avoid probate.
- You want to minimize estate taxes once the trust grantor passes away.
- You want to keep your wealth in your family.
C4 Legal Assistance can help you determine the best type of trust for your situation and prepare all the necessary documents required. Call us for your free consult today – 805-585-3828.