Personal Finance 1st Edition by Jack R. Kapoor

Exercise 19

1 Differentiate among the various types of trusts.

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2 What is included in an estate?

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3 What are the three types of joint ownership?

Action Application Discuss with your attorney the possibility of establishing a trust as a means of managing your estate.

Step 1 of 4

(1) Differentiate among the various types of trusts:

Credit-shelter trust: It is a trust which allows the married couples to leave each and everything to each other which is free of tax.

Disclaimer trust: It is a trust which is designed for the couples who do not have/possess enough assets to need a trust for credit-shelter but may require it in the future.

Living or inter vivo trust: It is an arrangement in property management which will be established while a person is alive.

Testamentary trust: It is a trust which is established by the will of the creator which becomes effective upon his/her death.

Life insurance trust: It is a trust in which the assets are derived at least in part from life insurance proceeds.