So you thought you’d set up a simple ‘one size fits all’ trust…only to discover that there’s no such thing as ‘one size fits all’, did you?
In today’s financial planning article we’re going to take a look at the different types of trusts. Let’s start off with the first classification of a trust which is whether…
The founder of the trust is dead or alive?
1. Trusts mortis causa
How can someone start a trust once they’re technically dead?
Quite simple really! In terms of a Last Will and Testament you may include a clause stating that you want to have a Testamentary Trust set up upon your death. The legal term is Trusts mortis causa and this type of trust only comes into existence upon the death of the founder.
Why would you want a testamentary trust anyway?
Usually it’s to take care of minor children in the event of something unforeseen happening to both parents. The trust comes into existence upon the death of the parents and usually lasts until the child reaches the age of majority which is 18 (although another age may be specified in your will).
Then of course, there’s the trust which is founded while you’re still alive, and which is better known as an…
2. Inter vivos trust
This type of trust is something which you set up while still alive. This is the standard ‘run of the mill’ type of trust which is used to protect your assets and ‘freeze’ your personal estate. This type of trust comes with a lot more administration than does a Testamentary Trust, and unless you plan on purchasing assets in the name of the trust, wouldn’t make sense.
In our next article we’ll take a look at the second classification of trusts.
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Until next time.
The InsuranceFundi Team