Trustors usually have specific goals when making a trust. To attain these goals, there are a host of specialized trusts that can address pertinent issues that a trustor wants to. There are a few specialized trusts including the spendthrift trust, the sprinkling and spray trust, marital deduction trust, the life insurance trust, and charitable trusts.
The spendthrift trust protects the assets of the trustor; the trust includes an extra clause that exempts creditors from toying with the assets of the trust and also makes sure there is no damage is caused by a beneficiary’s carelessness. In a sprinkling and spray trust, the trustor gives the trustee full discretion on how to distribute the trust money. In this situation, there will be future expenditures, and when it comes time to pay, the trustee will distribute the finances as needed. The trustee will distribute the money whoever is the most deserving beneficiary at the specific time. In a marital deduction trust, when one spouse dies, all the assets pass to the surviving spouse tax free. In order to have the assets pass with no tax, there initially needs to be two trusts made by the spouses. With two trusts, a life interest in the trust income transfers to the other spouse. When a trustor makes a life insurance trust, the trustor names himself on the life insurance policy while creating an irrevocable trust where they are the beneficiary of the life insurance. When the trustor dies, the proceeds from the life insurance automatically go into the trust. A charitable trust is a trust created for the benefit of multiple people, the public, and not for the individual beneficiary. There must be a charitable reason for the trust including but not limited to religious or educational interests.