Do Most People Need To Have More Than One Type Of Trust?
Most people will be satisfied with one revocable trust during their lifetime. After the death of the first or both spouses, the trust will often dissolve or push out funds into multiple sub-trusts. In the event that the spouses have large amounts of separate property, it is advisable to create two separate trusts, in which case both may be seen as beneficiaries to each trust. This path is used for purposes of keeping certain non-marital assets segregated and separated.
Another reason why you might need multiple trusts is if you are a very wealthy person and you’re setting up special needs trusts, charitable trusts, or some of the other more complex trust structures that exist. This is usually the case for individuals whose net worth is in excess of 10 million dollars.
The vast majority of the American population would completely cover their needs with one revocable trust tailored to their needs and typically will not need multiple trusts.
What Are The Components That Make Up An Effective Trust?
In an effective trust, you must address the most important aspects first, such as the exact transition structure, how the transition of power will work between the trustees, how distributions will be made for the beneficiaries and the framework for how disputes are going to be handled. Ultimately, the point of a trust is to avoid the need for litigation, so the rules must be as clear as possible. A well-drafted trust is going to predict every potential scenario and specify an answer. There are a lot of legal and technical requirements for trusts that must be met.
Every client’s needs are different, therefore, you must meet with your attorney to design a specific framework to work for your unique goals.
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