Trusts gifts on the installment plan
You can provide financially for loved ones or a favorite charity by creating a trust. In a trust, you give another person, the trustee, limited control over certain money or property for the purpose of producing income to be paid to someone you name, the beneficiary.
The trust continues for a certain prearranged time; then the trustee turns over the remaining property to a designated person, who might be the beneficiary, yourself, or anyone else. For example, you might set up a trust to put a nephew through college, specifying that when he is awarded a bachelor’s degree. the balance of the property be divided between your son and your daughter.
Funds can be used only for the purposes specified in the trust agreement. Therefore, if you set up a “spendthrift” trust to support a financially irresponsible person, the funds will be used to pay his normal living expenses but not his gambling debts. If you set up a charitable trust to feed and clothe blind orphan children, the funds cannot be used to add a wing to the orphanage.
Setting up a trust
Before making any binding commitments, consult an attorney experienced in trusts. To protect everyone involved, put the trust agreement in writing (most states require it).
You can establish a trust to operate while you are alive; it is called an inter vivos, or living, trust. Or you can pro-vide in your will for a testamentary trust, to take effect on your death. If you wish to reserve the right to revoke a living trust at a future date, have that right included in the agreement. Otherwise, in order to revoke it, you will have to obtain the permission of all the beneficiaries-not an easy task!
Select as trustee only a person in whom you have great confidence and whose ability to manage money you respect. You may prefer to use a bank or trust company or both an individual and a bank or trust company.