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Between the two main types of trusts, revocable trusts are the most common. This is primarily due to the level of flexibility they provide. In a revocable trust, the trustor (or the person who created the trust) has the option to modify or cancel the trust at any time during their lifetime.
Common Types of Trusts Inter vivos trusts or living trusts: created and active during the lifetime of the grantor. Testamentary trusts: trusts formed after the death of the grantor. Revocable trusts: can be changed or revoked entirely by the grantor.
The grantor (also called the settlor, trustor, creator, or trustmaker) is the person who creates the trust. Married couples who set up one trust together are co-grantors of their trust. Only the grantor(s) can make changes to the trust. The trustee manages the assets that are in the trust.
A Settlor, Trustee, Beneficiary So, there are three parties to a trust: (1) the owner who transfers the property (the settlor, or sometimes called the donor or grantor); (2) the person receiving the property (the trustee); and (3) the person for whose benefit the property is being held (the beneficiary).
An option might be to transfer the funds from an existing custodial account into a trust for the benefit of the minor or young adult, such that the recipient does not receive a docHub lump sum until a later age, such as age 25 or 30 or beyond.
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A revocable trust can be changed at any time by the grantor during their lifetime, as long as they are competent. An irrevocable trust usually cant be changed without a court order or the approval of all the trusts beneficiaries. This makes an irrevocable trust less flexible.
A custodial trust is a bank account, trust fund, or brokerage account which is created for a beneficiary but held in trust by a responsible individual. This individual is called a custodian, instead of a trustee.
Whats the difference between a custodial account and a trust? Custodial accounts are simpler to establish than trusts, which generally require more planning and the help of an attorney. However, a trust can offer more flexibility, control, and protection than a custodial account.
Irrevocable: A custodial account legally belongs to its beneficiary the child. Once they come of legal age, they get full control of it, and can use the proceeds however they wish no matter what parents intended.
Disadvantages of Custodial Accounts Since the holdings count as assets, they may reduce a childs financial aid eligibility when they apply for college. It could also reduce their ability to access other forms of government or community aid.

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