Trusts Come in Many Forms:
There are numerous specific types of trusts, each
type characterized by different objectives and
variables in the trust declaration terms, each with its
own advantages, problems and tax results. At various
stages of a person's economic life, one or more types
of trusts may be appropriate, and as circumstances
change, new ones might well be needed.
Perhaps the most common use of trusts occurs in
estate planning where a trust can serve as an effective
way to pass title to property, while avoiding lengthy
and complicated probate court procedures and
confiscatory inheritance taxes when the property owner
dies. Nationally, in the United States, probate fees
alone (exclusive of federal and state death taxes),
average from one to 15 percent of the gross value of
the entire estate, a enormous sum in many cases - and
that much less for the heirs. The time-consuming
probate process in some states, such as California, can
require up to two years to complete.
A trust once established, especially if operative
for a reasonable period of time, is less likely to be
challenged in court as compared to a will which is far
more susceptible to a contest during probate. The
existence of a previously created trust is evidence of
the grantor's sound mind and careful planning, an
obvious defense to the charge of mental incompetency,
often the basis for attacking the validity of a will,
especially one written late in life.
