Trusts are created for many different reasons. They always have been and this has led to the existence of many different types of Trusts. A Trust designed for the primary purpose of not having an estate pass through Probate will have different elements than a Trust designed for the primary purpose of protecting assets from potential creditors, for example.
That there are many different types of Trusts can create problems for people who do not properly set up a Trust as some types of Trusts are required to be set up in specific ways. This is especially true when part of the purpose of the Trust is to lessen someone’s federal income tax burden.
For example, Joseph Mohamed, Sr. tried to create a special Trust called a Charitable Remainder Unitrust. This is a Trust that allows someone to leave property to charity in the Trust, still use the property during their lives, and take an immediate income tax deduction. Mohamed is a real estate appraiser and he valued land that he put into the Trust. However, IRS regulations require that an independent appraisal be obtained. Because Mohamed did not have one, he was not allowed to take an income tax deduction for his charitable donation.
Make sure that you have a professional assisting you, if you want to create a Trust. They are not all alike.
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