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A simple trust is a trust where the trustee’s only duty is to distribute the assets to the beneficiaries according to the terms of the trust. Simple trusts are aptly named, because they are in fact simple trusts to deal with. They do not include charitable gifts and they do not include assets that earn income after the grantor has passed away.
There are two types of simple trusts: revocable and irrevocable. In a revocable trust, the grantor can be living and can add to the trust any time during his life. He can also change the terms and/or beneficiaries at any time during his life. Once the grantor dies, the terms in the revocable trust become irrevocable, which means they can’t be changed.
A testamentary trust is one common simple trust that is used very often in situations where there are minor children as the intended beneficiaries. In a testamentary trust, it does not go through the probate process at all. The appointed trustee of the trust, who is supervised by the courts, manages the trust and ensures the terms are carried out as the grantor stipulated.
Living trusts are almost always revocable. These types of trusts allow the grantor to increase the trust holdings by transferring property, monies, and other assets to the trust at any time. Living trusts protects the assets from the grantor’s heir’s creditors, but is not able to protect it from their own creditors and may be subject to taxation since it is still considered assets of the grantor.
In a simple trust, the beneficiaries have the right to take possession of the trust property and any income and capital left behind by the grantor. The trustee holds the property in their name but other than that, they have no say in the matter when it comes to the income the beneficiary receives.
Selecting a trustee for a simple trust is a relatively easy process. The trustee should not benefit or gain in any way from the assets or income of the trust. When choosing a trustee, it is common to have family members act as trustee, but if there is a family lawyer, in many cases it is wiser to choose someone who has no vested interest in the beneficiary. It can make things a lot smoother in the long run to have the trustee simply be a legal professional with no emotional ties to the family whatsoever. Above all, make it someone you can trust to carry out the wishes of the grantor the way he/she intended.
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