Rubino & Liang, LLC. - How A Trust Works

A trust is a legal arrangement by which you transfer ownership of your titled assets (generally, real estate, bank accounts, investments, etc.) from your name to the name of your trust. Your trust becomes the legal owner of your assets. Trusts can be used to: reduce estate taxes and probate expenses; avoid probate delays; provide income for loved ones; and protect your assets when long-term care is required. Trusts come in two types -- revocable and irrevocable.

With a revocable trust, even though you no longer own the assets, you still control the assets. You can continue to use the assets, even buy and sell the trust's assets. You can make changes to the trust and even cancel the trust if you so choose. In effect, the only thing that is different is the name on the titles. Revocable trusts are used to avoid probate and for long-term care planning -- especially when one spouse is still healthy.

An irrevocable trust is a legal vehicle in which the grantor gives up both ownership and control of assets -- usually involving a gift of the assets to the trust. The trust is a separate taxable entity and pays tax on its accumulated income. Irrevocable trusts are useful in life insurance planning, avoiding probate costs and estate taxes, and to provide children with funds for providing a perpetual stream of income for loved ones.

Trusts are a very flexible vehicle and offer many benefits, but you need to carefully consider the advantages and disadvantages. In addition, the time at which the trust is created can significantly impact its effectiveness (especially when used for long-term care purposes). So, planning early is critical.

We can help you through this process in terms you will understand. To learn more, call us at 1.877.630.8787,
or Contact us by email .