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It is common to put trusts within trusts.  Remember, a trust is a legal entity in which a Trustee holds legal title to property for the benefit of someone called a beneficiary. (See glossary and article about “How Does a Trust Work”)

Let us say you have minor children or grandchildren you want to give something to after your death. Or perhaps you are concerned that your spouse, parent, friend, will not be able to manage the trust property you want to give to them after your death. You want a way to protect your loved ones.  A trust within your trust can do that.

In your revocable trust (see above) you can provide that on your death, your Successor Trustee shall create a trust for each of your intended beneficiaries, i.e. your minor children, grandchildren, spouse, parent or friend.  You tell your Successor Trustee to take a certain part or all of your trust property and hold it separately for the benefit of your intended beneficiary. 

Your trust document then tells your Successor Trustee what to do with the property, e.g. pay for education, health, maintenance and support.  Your trust document states how long this new trust for your designated beneficiary(ies) is to be held and what happens when it ends.

For example, suppose your grandchildren are 3, 5, and 7.  You can provide a trust within your trust for each child. Your trust document may provide that on your death, your Trustee is to create a separate trust for each child.  You say what property goes into each trusts by amount, percentage, etc.  You empower your Trustee to manage the trust property for each child.  You say that your Trustee may pay for their education, health, maintenance and support, or whatever is important to you. Or you could provide that the money you leave in trust is only to be used for their higher education.

You say what the money can be used for.  If for example the beneficiary is your spouse, you might say to pay for their health, maintenance and support in their accustomed manner of living. You also say when it ends, e.g. at a certain age, or the happening of an event, (i.e. graduation from college) or at their death.  At the end of its use,  the balance not used can go to the beneficiary or to someone else.   

Thus, you have created a trust within your trust.  You have provided for the care of those you want.  You have maintained control.  And you can be assured that your wishes for your property are respected and followed. Be sure to have a competent lawyer prepare it for your individual situation.

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