Updated July 22, 2015
What kind of trust is best for me or my situation in Chicago Illinois?
There are over fifteen different types of trusts, which are very generally divided into two categories. Simple trusts and complex trusts.
A simple trust requires current distributions of all of its income, cannot distribute its principal, and cannot make charitable contributions. A complex trust is any trust other than a simple trust.
There are other ways to categorize them, such as a trust that can be changed, versus one that cannot. The type you would choose depends on the asset or group of assets going into the trust, the original purpose of the trust, and the amount of control necessary given the abilities of the trustee.
Let’s use an example to clarify.
You have three children and $2.4 million to give away. You want to give it to them equally, or $800,000 apiece. One of your children has a drug problem, and has stolen from you before. You know that the second this child gets $800,000 it will go right up their nose, so you put it into an irrevocable trust. This is one that, in concept, cannot be changed. You, therefore, are reasonably assured that the asset will not be misused.
What kind of trust is best for me or my situation in Chicago Illinois? That depends on your goals.
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Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.