What is a Living Trust?

A private trust is a trust established for private benefit purposes, that is, for the benefit of a specific person designated by the trustee. At present, various commercial trusts in various countries, as well as civil trusts common in countries adopting the British-American system, are private trusts. For the adjustment of private trusts, the general provisions of the trust law apply; for the adjustment of non-profit trusts, not only the general provisions of the trust law, but also the special provisions of the law on such trusts.

Private trust

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The requirements here specifically refer to the certainty requirements of the beneficiaries.

The restriction trait here constrains the will of the client.

When deciding whether and how to create a private trust, tax law considerations are often important. The main purpose of many trusts is to reduce or avoid income, inheritance, inheritance, and gift taxes. Anglo-American law inheritance planning plays an important role in wealth inheritance and management. status. A private trust is a common purpose, that is, the trustee uses the design of the trust to distribute its property to his family and his friends. The terms of the trust usually stipulate that the income goes to the beneficiary of life or the beneficiary of the terms of the trust. The transfer of the principal of a trust to its relatives, friends, or public welfare purposes (the trustee routinely uses a trust that separates principal and proceeds for its private benefit). Sometimes this type of trust is called a "family trust". A living trust is created before commissioning, and a testamentary trust can also be created according to his will. The trustee usually uses the living trust to stipulate that he is the sole beneficiary or one of the beneficiaries of the trust income during his lifetime. Enjoy trust income during his lifetime. In addition, private trusts are also widely used for the following purposes.

1. Managing property for the benefit of the client. The client may be unwilling to manage wealth based on many motives, so he can create a trust that benefits himself and pay the client pure net income and the principal of the trust as required by the client in order to avoid property management issues and liabilities. .

2. To protect the misfortune or waste of the beneficiaries. Use the "Spendthrift Clause" clause to avoid direct gifts that could adversely affect beneficiaries' future enjoyment of wealth. The meaning of a "profligate trust" is that the beneficiary cannot transfer the right to pay the principal or proceeds in the future, and the creditor of the beneficiary does not have the right to use the benefit of the beneficiary to pay off his claims. , Is not involved in any restrictions on transfers or creditors' rights to property, but only limits the right to future payment of the trust. If the beneficiary of the "professor trust" transfers its right to future income, the right assignee Has no right to force the trustee to pay the trust proceeds, but if the beneficiary has not waived the assignment, the trustee can treat the assignment as an order to pay the assignee, and unless the trust instrument order can only be paid to the beneficiary For payment, the payment made by the trustee before the transfer is cancelled will be protected.

3. Ensure that the insurance is managed, maintained during the life of the insured, and that income is collected and invested when the insurance policy expires. A large number of life insurances are held in trust in this so-called "insurance trust". In the United States, if the insured makes the trustee the beneficiary of the insurance policy without transferring the corresponding funds (such as money, securities, etc.) to the insurance policy This kind of trust is called an "unfunded" insurance trust, and if the client-insured not only pays the insurance policy to the trustee, but also transfers stocks or bonds to the trustee, The resulting income is used by the trustee to pay the insurance premiums on the insurance policy. This method is called a "funded" insurance trust. This insurance trust can be applied not only to the relatives of the client, but also to the commercial field. In the case of a "commercial" insurance trust for a company or partnership, in practice, insurance trusts are generally exempt from their creditors because they are paid to the trustee rather than the insured's estate manager or property manager. It may be exempt from inheritance tax for the insured's estate, and its application is more extensive.

4. Provide guarantees to lenders. For example, the "trust network" (also known as a corporate bond trust with guarantee), the trustee holds the mortgage provided by the bond issuing company for the benefit of the bondholders. In many states in the United States, this kind of Trusts are very popular, and "trust instruments" for security purposes seem to replace common law mortgages.

5. A creditor's trust established to pay the creditor of the client. If it is the creditor's benefit to the trustee, or if the company is bankrupt, the property is transferred to the liquidation trustee, so that it can save, sell, and distribute the company's property for the creditor who holds the beneficiary's qualifications.

6. Trust as a means of gathering investment. In the case of a securities or real estate investment trust, the trust's shares are sold to the investing public. In a land trust, the purchase and development of real estate will be obtained by selling a certificate of interest on the real estate.

7. "Illinois Land Trust" (also known as "Subdivision Trust"). That is, a piece of land is divided into many small pieces, and then sold, and the sale income is distributed to the holders of the wealth and wealth certificate holders. In other words, a trust is established for the benefit of those who provide capital and want to benefit from the sale.

8. Voting trust. The company's shareholders can set up trusts in the company's shares and centrally manage them to exercise their right of decision for the management and development of the company they desire.

9. "Massachusetts Trust" (also known as "Business Trust"). That is, the assets of a commercial enterprise are transferred to the trustee for the purpose of managing and developing the company. In this case, the trust replaces the form of the company, and the trustee is similar to the company's directors or officers, and the beneficiaries are Shareholders of the company.

10. Trust to continue the business of the deceased. For example, to continue operations uncertainly for profit purposes or for a liquidation enterprise to pay off its creditors or heirs.

11. Create annuities or dividends or trusts for company employees. The fund is funded by employers and sometimes raised by employees. Its goal is to pay employees retirement benefits and disability or death benefits, and some also provide for stock purchase rights.

12. The court passed a decree to create a trust. To achieve the most appropriate outcome in litigation, such as a presumptive trust to correct fraud.

13. The legislature creates trusts to promote the public interest.

14. When a couple is separated or divorced, a trust may also be created for the wife and children.