The centerpiece of most modern estate plans is a “Revocable Living Trust.” This is a trust where you retain control of the assets of the trust as the trustee, and while you are alive you can amend or revoke the trust at will. This is a good estate planning tool for couples and individuals primarily because it greatly simplifies the administration of your estate when the time comes. Depending on the complexity of your estate, it can also serve to substantially cut estate administration costs by avoiding the formal court-based probate process.
Depending on the size of your estate, the revocable living trust can be set up to divide into two halves on the death of the first spouse, and thus take full advantage of both spouses’ lifetime estate tax exemption (your total estate would have to be over $5,000,000 for this to make sense) or simply remain a single trust for smaller estates and ease of administration.
Other 'Exotic' Trusts: There are several other kinds of trusts that are used to hold property for specific purposes and for the avoidance of tax liability, including Qualified Personal Residence Trusts (QPRTs), Irrevocable Life Insurance Trusts (this can be a key tool for estate planning for a successful small business person), Intentionally Defective Grantor Trusts (yes, intentionally defective), Grantor Retained Annuity Trusts, Grantor Retained Income Trusts, etc. The more exotic trusts may not be appropriate for most families or individuals, but they can be quite useful in the right situation.
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