Trust Classifications in California

In addition to the broad classifications of trusts—revocable and irrevocable, living and testamentary—trusts can fall into further classifications based on their purpose and the specific characteristics that help them fulfill that purpose. The San Mateo County trusts attorneys of Fox, Shjeflo, Hartley & Babu LLP understand the various types of trusts available and advise clients how to use these trusts to meet their financial goals.

Some types of trusts

Spendthrift trust

A spendthrift trust is useful when giving a gift to a beneficiary who is not good with money or has trouble with creditors. Adding a spendthrift provision to a trust instrument prevents the beneficiary from voluntarily or involuntarily assigning or selling his or her interest in the trust. It may also give the trustee discretion to withhold disbursements if there is a concern the beneficiary is wasting the money.

Special needs trusts

People usually establish special needs trusts for the benefit of a disabled or elderly person who receives government assistance such as Medicaid. A trusts lawyer in San Mateo County can specially draft a trust that can provide income to such a beneficiary without interfering with his or her qualification for government assistance.

Charitable trusts

Unlike most other types of trusts, a settlor of a charitable trust does not need to name a specific beneficiary. They are also often exempt from complex legal requirements governing the length of time a trust can exist. Instead, charitable trusts contribute money to charitable pursuits in accordance with the terms of the trust and, to some extent, the discretion of the trustee.

These are just a few common examples. There is a multitude of recognized trust types designed to lessen the burden of the Federal Estate Tax as well as other tax purposes. Trusts can range from very simple to very complicated. They may have one or more trustees and one or more beneficiaries. Trusts can be constructed to make different disbursements to different sets of beneficiaries at different times.

In addition, trusts can make payments from their income, principal, or both. Trusts can even be split-purpose, such as a trust that pays income to a beneficiary during his or her lifetime, and then distributes the principal to a number of charities after the lead beneficiary dies. This vast flexibility is why trusts have become such an important and useful estate and financial planning tool.

A San Mateo County trusts attorney can help you plan for your financial future

The San Mateo County estate planning lawyers of Fox, Shjeflo, Hartley & Babu LLP can review your situation and goals and create a trust or estate plan that meets your needs. Contact us today for a complimentary consultation. Call our office at 650-341-2900 or leave a brief message on our contact page.