A support trust is a type of trust arrangement set up to provide for a beneficiary. The support trust will have a beneficiary, a trustee, and a grantor. This type of trust is designed to pay for the basic living expenses of the beneficiary and is not set up to provide any extra luxuries.
The support trust is an estate planning tool commonly used by parents who want to take care of their children in the event of their demise. With this arrangement, the parents would set aside a certain amount of assets for the creation of a support trust. The assets would be entrusted to a trustee. The trustee in this arrangement has a great deal of responsibility and has to be able to make decisions on behalf of the grantors of the trust.
Once the assets are placed into the care of the trust, the assets are removed from the estate of the grantors. The assets then become the property of the trust. When the individuals who set up the trust pass away, the trustee will then be in charge of distributing assets to the beneficiary.
The assets from the trust can be used to pay for a variety of expenses for the beneficiary. The money can be used to pay for housing, food, school tuition, utilities, gas, and other basic expenses necessary to live. Many trust arrangements have set guidelines for the trustee to follow when making payments for these expenses.
Even though other types of trusts allow payments for luxury purchases, the support trust does not. This type of trust can be looked at as a trust to pay for essentials only. In fact, if a beneficiary wants money for something, he or she may have to submit a request to the trustee to be reviewed. The trustee will look at the request and determine if it is absolutely necessary for the good of the beneficiary. During this process, the trustee has to use his or her own judgment in the absence of the individuals who originally set up the trust.
One of the benefits of the support trust is that the assets in the care of the trust can not be taken by creditors. Even if the grantor of the trust owed money to someone else, the creditor cannot come after the assets in the trust. This ensures that the beneficiary will be taken care of in the future.