A Trust is a specialized legal contract to manage your estate for your beneficiaries. Trusts are generally more flexible, and more specialized, and offer substantive tax benefits not found in other legal vehicles. Other legal vehicles are aids in helping you administer your estate, but do not have the extensive legal benefits and ramifications of a Trust.
Some common legal vehicles that relate to the management of property are:
| Trusts vs. Other Legal Vehicles | |
|---|---|
| Power of Attorney | This is an agency relationship – you designate another person to become your legal agent. You are in fact authorizing that person to act on your behalf for legal and financial purposes. For instance, a power of attorney will allow another person to sign a contract in your name. If you (the Grantor of the power of attorney) become disabled or incapacitated, the power of attorney is voided. |
| Custodial Accounts | These are specialized accounts opened on behalf of a minor. You operate the account for the minor, who is its beneficiary. When the minor reaches the legal age (18 or 21 depending on the State), the property in a custodial account reverts to him or her. A relevant difference between custodial accounts and Trusts is that a Trust can hold assets to whichever age the Grantor establishes for the beneficiary. |
| Education Savings Plans | These arrangements are limited in scope. The intent is to provide income for the future cost of education (undergraduate or graduate). While they may provide tax benefits, they do not offer the same tax protections as a Trust. |
| Partnerships and Limited Liability Corporations | Both these arrangements are used to manage assets. Their function is very similar to a Trust, and sometimes they are used instead of a Trust. The powers given to a partner are similar to those given to a Trustee. |
* StateTrust does not provide fiduciary or trustee services, nor does it act as a fiduciary or trustee. StateTrust only serves as an intermediary in providing introductions to legal counsel and licensed trust companies that can provide fiduciary and trust services. Our services consist of managing the assets held in such trusts and legal entities.
Trust Topics