Question

7. Using trusts to transfer assets from an estate Trusts facilitate the transfer of property (and the income from that property) from an estate to another party A trust is a legal relationship created when one party, the Aa Aa E transfers property to a second party, the (which may be an organization or an individual), for the benefit of one or more third parties, the The property placed in the trust is called the or res (the Latin word for thing or possession) Trusts are used for various purposes, but the most common reasons for using a trust to transfer assets from an estate are (1) to attain income and estate tax savings and (2) to conserve property over a long period of time. Consider the following scenarios. Alex and Carl both created trusts but used different approaches: Alex Carl Carl is a wealthy individual who has created a trust in which the primary asset is life insurance on his life. Carl has named the trustee as the beneficiary of the trust in order to avoid having the proceeds of the insurance policy included in his own estate. The trustee will then use the proceeds to pay for Carl's estate taxes and to help take care of his spouse. Eventually, the remainder of the proceeds will be distributed to Carl's children. Alex created a trust that goes into effect as soon as the papers are signed-that is, while he is still alive. Alex has the right to change the trustee, the beneficiary, and other terms.

Answer 1

A trust is a legal relationship when one party, the Trustor/ settlor transfers property to a second party, the trustee, for the benefit of one or more third parties, the beneficiary/ beneficiaries. The property placed in the trust is called the Trust property/ subject-matter/ corpus/ principal or trust res.

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Alex - A revocable living trust (as it comes into effect immediately, not after the death. Also, the terms, trustee, beneficiary, etc can be changed by Alex )

Carl - An irrevocable life insurance trust (self explanatory)

Jared - An irrevocable living trust (because it can't be changed without the consent of beneficiary, and comes into effect when Jared is living)

Hubert - A testamentary trust (as he wants the trust to come into effect only after his death in a specified way)