What is a trust?
A trust is when one party (known as the trustor) gives a second party (the trustee) the job of holding property or assets for a third party (the beneficiary).
It's a great way to make sure money is set aside for another individual — like a child or grandchild — or to give back to your community or another cause that's important to you. Plus, establishing a trust account or policy may help prevent funds from being tied up in court after your death.
Important trust account information
- You must already have a trust established to open a trust account or policy.
- A trust account or policy can be registered in the name of a trust (living, family, charitable, or other).
- Trust accounts or policies are often set up to help meet financial needs for family members or for charitable reasons.
- If you set aside funds for a child or grandchild in a trust account or policy, that child will be able to access the funds based on the conditions in the trust document (for example, when he or she reaches a certain age).
Types of trusts
- An irrevocable trust generally can't be modified or terminated without the permission of the beneficiary and/or judicial authorities. It may be useful for federal estate tax planning.
- A revocable living trust generally lets you transfer ownership of your property into a trust throughout the course of your lifetime. It gives you more control over your estate, both before and after death.
- A testamentary trust is generally created by the terms of your will and goes into effect upon your death. It can't be amended or revoked.
- A special needs trust is created to provide supplemental income for the welfare of an individual with a disability. The trust can supply funds for travel, education, out-of-pocket medical expenses, and personal care expenses not covered by government programs.
Neither State Farm® nor its agents provide tax or legal advice.
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