* Asset protection / wealth preservation

* Reduce potential frivolous lawsuits

* Elimination of the "probate jail process" (see definition, below)

* Elimination of estate taxes

* To gain some tax benefit or some other tax deferral benefit.

If the "Grantor" initiates the trust (contract), it’s called a "Grantor Trust," otherwise it’s called a "Non-Grantor Trust." To me, it’s just legal garbage so lawyers can charge more.

If the "Grantor" wants to retain certain control over his asset(s), it’s called a "Revocable Trust" otherwise, it’s an "Irrevocable Trust."

Revocable / Irrevocable has significant asset protection and tax differences.

"Revocable," is like the kid next door that brings the ball to play basketball with the other kids. Everything is fine, as long as he makes the rules, and he makes the rules as he goes along. If you don’t agree, he takes the ball and goes home. Ball game over.

One name given to a revocable trust is the "Living Trust." The sole purpose of the revocable living trust is to "eliminate the probate jail process." Control is like the kid with the basket ball. It’s still his ball. Therefore, there’s absolutely no tax benefit and no asset protection / wealth preservation benefits.

The grantor of a revocable trust can be sued for all assets held by the revocable trust, and must pay all the taxes. Personally, I think the "Living Trust" is a sham perpetrated on you by shameless professionals.

"Probate jail process" is the process where the state takes control over your assets (estate) upon your death because "you" the owner of the assets, now dead, did not specify who should have received your assets subsequent to "your" death.

Naturally, this is a money making risk-free bonanza for lawyers, accountants, appraisers, judges, federal and state tax agencies who will consume up to 70 to 80 % of your estate. "Probate Jail."

The federal government stakes their first and largest claim between 37 to 55% of your assets. States are second in line, then the courts, lawyers, appraisers, accountants. Finally, what’s left go to your heirs.

Currently only a few Americans prepare for this "estate death tax trap." The federal government (your largest heir) takes the biggest chunk up to 55%. Only Japan has a higher rate of 70%. Germany takes a maximum of 40%, while Australia and Canada, take nothing.

The trustee is bound by the trust document (contract) and he has a duty to protect trust assets for the beneficiaries.

Great care should be taken in your selection of your trustee.

The trustee can be your lawyer (worst person you would ever trust), your accountant, best friend, or any-one you trust who’s not a relative by blood or marriage. You may have more than one trustee. I usually recommend two trustees in all cases of $500,000 or more.

The trustee of an "Irrevocable Trust" has sole discretion over trust assets. Your selection of your trustee must be a carefully planned decision.

The significant item to remember is that an "Irrevocable Trust" gets the assets completely out of your (Grantor’s) name and in return you get complete asset protection, elimination of probate, elimination of estate or inheritance taxes, in certain cases a tax deduction for the assets contributed to the trust, and finally, under certain conditions other uncommon tax benefits not otherwise available.

Examples of irrevocable trusts are: the Ultra Trust® the Medallion Trust® the Vertex Trust® the Charitable Remainder Trust, the Charitable Lead Trust.

Additional: In cases of substantial assets, you may add one other safety measure, "the Trust Protector." The trust protector’s sole function is to hire and fire trustees, at will and without explanation.

Your beneficiaries are the guys that will enjoy the benefits of your trust assets. They include, wives, children, grandchildren, charitable organizations of every color and variety.

The length of your beneficiaries is unlimited. Beneficiaries could include the original grantor, but that would be self defeating. Generally, trusts are irrevocable. The grantor gives-up his assets to gain asset protection, elimination of probate, elimination of estate taxes, and gain certain uncommon tax advantages. Any degree of control by the grantor will render the trust revocable and subject to court discretion.