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  • A trust is a legal relationship in which the legal title to property is entrusted to a person or legal entity of your choice who has a duty to hold, guard, and use it for another's benefit. You can even name yourself as the initial trustee and beneficiary.  A trust may provide liability protections, tax benefits, and the avoidance of the probate of your assets in the event of your death.

Types of Trusts

Revocable versus Irrevocable Trust

  • A revocable trust may be revoked or modified by grantor during his or her lifetime but lacks the tax benefits of an irrevocable trust. But such trust are still useful to avoid the need to probate your estate. By contrast, an irrevocable trust cannot be revoked or modified by the creator without permissions of the beneficiaries. And revocable trust change into irrevocable trust once the final grantor dies. 

Living Trust 

  • A living trust is made during the grantor's lifetime. An individual can make a personal trust, or couples can even create a joint family trust.

Testamentary Trust

  • A testamentary trust is created at the grantor's time of death through a provision in their will.

Special Needs Trust 

  • A special needs trust is established to meet the financial requirements of a dependent who due to circumstances is unable to fully support or care for themselves.  

  • It funds the beneficiary’s medical or day-to-day needs while preserving the dependent’s entitlement to government benefits. 

  • There are two main types of special needs trusts: first-party and third-party special needs trust.  

  • First-party trust are funded by the dependent themselves, while third-party special needs trust are funded by someone else, like a parent.

Asset Protection Trust (APT)

  • An asset protection trust (APT) is a trust vehicle that holds an individual's assets with the purpose of shielding them from creditors and other liabilities.  

  • Asset protection trusts offer the strongest protection against creditors, lawsuits, or any judgments against your estate.  

  • An APT can even help deter costly litigation before it begins influence outcomes of settlement negotiations favorably.  

  • These are not available under California Law, but some states do recognize them. Often an offshore APT in another country is the best option when combined with a foreign LLC to maximize protection.

  • Currently I do not offer APTs. 

Personal Asset Trust (PAT)

  • A personal asset trust is a special kind of trust derived directly from your living trust document.

  • It is designed to help you put certain protections in place for your money once it gets passed on to your beneficiaries. 

  • Provisions creating Personal Asset Trust are included in your living trust due to concerns you may have about what your beneficiaries may do with distributions of your trust estate.

IRA Inheritance Trust 

  • This is when a trust is named as beneficiary of the IRA and inherits the funds. The IRA is then maintained in a separate account as an asset of the trust. 

Life Insurance Trust 

  • A life insurance trust is a trust that owns the eventual proceeds of your life insurance policy and can be used to make distributions to your name beneficiaries. Once you create such a trust, you are no longer the legal owner of the life insurance policy. This mean the trustee holds legal title to the policy. When you die, the proceeds will not be part of your probate estate.  

Qualified Personal Residence Trust  (QPRT)

  • This is a form of irrevocable trust that allows its creator to remove their home from their estate with the intent to lower the amount of gift tax that is incurred when transferring assets to a beneficiary.  

  • The purpose of these trusts is to lower your taxable estate. 

Medi-Cal Asset Protection Trust (MAPT)

  • Is an irrevocable trust created with the intent to take on assets (such as a home and savings accounts), such that the creator will be able to qualify for Medi-Cal Long Term Care Benefits and will also prevent the State of California from pursuing “Medi-Cal Estate Recovery.” 

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