How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Attorney2020 Your Own Question
Attorney2020
Attorney2020, Attorney
Category: Estate Law
Satisfied Customers: 2577
Experience:  Estate planning and wealth preservation attorney.
63724254
Type Your Estate Law Question Here...
Attorney2020 is online now
A new question is answered every 9 seconds

What is a sub trust and is it necessary in a family trust with

Customer Question

What is a sub trust and is it necessary in a family trust with one survivor?
Submitted: 7 months ago.
Category: Estate Law
Expert:  Attorney2020 replied 7 months ago.
A trust will often simply direct that the assets be distributed outright to the various beneficiaries. However, it is quite common that the trust will dictate that assets for certain beneficiaries be held in trust for those beneficiaries. This requires that you establish sub-trusts for those beneficiaries. Examples of common sub-trusts are a separate share trust for a minor, a bypass trust and survivor’s trust (for a married couple) or even a pet trust so that a beloved pet can be cared for. As successor trustee, you will need to identify any sub-trusts that are required under the trust document and ensure that those sub-trusts are properly funded.SubtrustsSub-trusts are especially common in administrations of trusts established by married couples. Married couples who have done proper tax planning through a living trust have what is known as an AB or ABC trust. This ensures that when the first spouse dies, the deceased spouse’s assets remain available for use by the surviving spouse, but in trust. By keeping the assets in trust, the assets remain out of the surviving spouse’s estate, sheltered from future estate taxes.While the couple is alive, their assets are held in a Joint Trust, owned equally by both parties (except for IRA and retirement funds, which must be in the owner’s name).After the first death, the trust is split into two or three parts: the Survivor’s Trust, the Family Trust, and, potentially, the Marital Trust. The Survivor’s Trust is generally designed to hold the Surviving Spouse’s assets. The deceased spouse’s assets are generally split between the Family and Marital Trust. The Family Trust, a separate entity, is not counted as part of the surviving spouse’s estate upon death. This trust can pay income to the survivor, and the survivor can also have access to the principal under certain circumstances. I hope that helped. Please ask any follow-up questions. Please rate my answer so that I may be credited for my time. I thank you in advance for your cooperation.
Expert:  Attorney2020 replied 7 months ago.
The subtrusts are typically developed for tax minimization purposes. Please rate my answer so that I may be credited for my time. I thank you in advance for your cooperation.
Expert:  Attorney2020 replied 6 months ago.
Please rate my answer so that I may be credited for my time. I thank you in advance for your cooperation.
Expert:  Attorney2020 replied 6 months ago.
I hope that helped. Please ask any follow-up questions. Please rate my answer so that I may be credited for my time. I thank you in advance for your cooperation.

Related Estate Law Questions