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Commonly Asked Questions about Trust forms for Adult Children

Irrevocable trusts are an effective way to remove assets from your taxable estate. Revocable trusts can help your estate avoid probate but they dont reduce your estate tax liability.
The 4 Biggest Mistakes Parents Make When Setting Up a Trust Fund Not choosing the right Trustee. Choosing the wrong Trustee is a common mistake parents make. Not being clear about the goals of the Trust. Not including asset protection provisions. Not reviewing the Trust annually.
For tax purposes an irrevocable trust can be treated as a simple, complex, or grantor trust, depending on the powers listed in the trust instrument. A revocable trust may be revoked and is considered a grantor trust (IRC 676). State law and the trust instrument establish whether a trust is revocable or irrevocable.
With that said, revocable trusts, irrevocable trusts, and asset protection trusts are among some of the most common types to consider.
A Simple Trust is a trust which makes no distributions other than current income. The trust terms require all its income to be distributed currently and do not provide for charitable contributions.
A simple trust must distribute all its income currently. Generally, it cannot accumulate income, distribute out of corpus, or pay money for charitable purposes.
Revocable trusts, also known as living trusts, provide for the distribution of a trusts assets after death. If you create a revocable living trust, you can continue to access the assets as you see fit for as long as youre alive.
The assets you cannot put into a trust include the following: Medical savings accounts (MSAs) Health savings accounts (HSAs) Retirement assets: 403(b)s, 401(k)s, IRAs. Any assets that are held outside of the United States. Cash. Vehicles.