Qualified Terminable Interest Property Trust: This trust allows a person to transfer assets at different times to specific beneficiaries, their survivors. In the typical scenario, a spouse receives a lifetime income from the trust and receives children, which remains after the death of his or her spouse. The contributor – is usually the adult who makes a gift or who contributes to a minor child. In a formal trust, that person would be called Settlor. Trusts are often used to hold assets on behalf of miners. Since minor children do not have the legal capacity to enter into a binding contract or the power to enter into a contract, even if the property is entrusted to them, trusts are used as a mechanism for holding property until the child reaches the age of majority. 1. Imagine that John and Lisa and their son Don. John and Lisa buy a house, contribute $US 200,000 to the purchase price of the house, and Don also contributes $200,000. First of all, it is said that Don owns 50% of the house. To allow his parents to obtain a mortgage and allow them to benefit from certain property tax exemptions, Don transfers his shares in the house to his parents.
When his parents died, they had never returned Don`s interest in him. Once a court was aware of the whole story, it could donate half of the house. The court would decide that Dons` parents held the part for him in a “constructive” confidence. They have the title, but they considered it the final advantage of Dons. This is a classic confidence agreement, although the parties may never have indicated that they intended to create a position of trust. A will trust, also known as a trust will, determines how a person`s property is determined after the person`s death. A formal trust agreement or agreement is usually developed by a lawyer and identifies the settlor, the ownership of the trust, the agent and the beneficiaries. A fiduciary corporation provides an individual (the “Settlor”) with a mechanism to make property available to another person (the “agent”) for the benefit of a third party (the “beneficiary”), while maintaining some kind of control over the property. The property is owned and managed by the agent.
The assets of the funds benefit from a catch-up, which can represent a considerable tax saving for the heirs who, after all, inherit the trust. On the other hand, assets that are simply given during the owner`s lifetime generally bear their initial cost base. Irrevocable trusts have similar benefits in estate prevention and disability planning, such as revocable trust, but can also achieve much more complex goals in wealth protection, benefit planning and tax planning. The full scope of the powers of irrevocable trusts and how these benefits can be guaranteed is the central theme of the rest of this course.