Skip to Content

We are a Veteran Owned Business, providing 20% discounts for Veterans, First Responders, Elementary and High School teachers. Please contact us to set up a phone or Zoom meeting. Taking care of you and your family, It's What We Do!

Estate Planning Lawyer Montgomery County, PA

What is a Complex Trust?

Posted on Fri Sep 9, 2016, on Trusts

From Our “Ask a Question” mailbag: What is a Complex Trust?

Most Recently Updated August 9, 2018.

“I am thinking about forming a trust for my minor child, but I read that a trust could be a “simple trust” or a “complex trust,” what is a complex trust?”

What is a Complex Trust? First, let’s define what a “Trust is.” 

A Trust is an arrangement where one person (the “Grantor”) gives an asset to someone else (the “Trustee”) to hold for a “Beneficiary.”  A Trust’s terms can be outlined on one printed page but can easily stretch over 50 pages.  For example, in your case, you would be the Grantor.  You create the Trust and give an asset to the Trustee.  The Trustee holds the asset for your minor child who is the Beneficiary.

See my website for more information about Irrevocable Trusts and Revocable Living Trusts.

What Is the Trustee’s Responsibility?

Once you have placed an asset into a Trust, it is the Trustee’s duty to care for that property. This responsibility includes following the Trust’s terms as to investments.  For example, if you contribute $100,000.00 into your trust, the Trustee should then examine the Trust’s terms to determine what is a reasonable way to invest that money. Once invested, the trust will have income, such as interest or dividends. 

A Simple Trust Requires the Distribution of all Income; Complex Trusts do not.

A “Simple Trust” will demand the distribution of all income.  A “Complex Trust” gives the Trustee discretion to either distribute the income or to hold the income within the trust.  The word complex means that the trustee has more discretion, rather than the trust’s terms are more complicated.  A tax return for a Simple Trust will show that all income passed out to the beneficiary.  In contrast, a tax return for a Complex Trust might indicate that some income stayed in the trust.  If the income stayed in the trust, the trust pays the income tax due.

What is Better, a Complex Trust or a Simple Trust?

Both types of trusts are excellent tools depending on the given facts. Both types have advantages and disadvantages. And, with more information, I could help you decide which is better for your beneficiary.

More Planning Questions?

The Complex Trust is only a piece of the Estate Planning process. By all means, if you want to learn more, please read my more detailed article, Estate Planning Everything You Need to Know.

In Conclusion: Complex Trust

I hope that this article was helpful in explaining a Complex Trust. Further, I included links to even more detailed information on my website so you can learn more. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!

Let our Estate Planning lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced estate planning lawyers.  By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!

Wills, Trusts, Probate, and Estate Litigation, It’s All We Do!

 

Tags:

Complex Trust, Estate Planning, Estate Planning Attorney, Estate Planning Lawyer, Irrevocable Trust, Trustee, Trusts

Peter KlenkPeter Klenk

What Our clients are saying

Klenk Law Logo
Stars

Linda F.

I'm totally satisfied with Klenk Law. Peter has a great legal mind with the personality of the guy next door.

Klenk Law Logo
Stars

A Google User

Peter is a model attorney who puts his clients first at all costs. His extensive expertise in estate planning and tax planning was a great comfort as we began, and have expanded, our family. He is very thoughtful, generous, and quick witted. His approach towards his business has been an inspiration to his peer group, and his zest for life is extremely infectious. Without reservation, I highly recommend Peter as trusted and cherished counsel

Klenk Law Logo
Stars

A Google User

Peter Klenk & Associates is my go-to firm for estate planning and advice in probate and estate administration. Peter and his attorneys are top-notch and exceptionally responsive. Peter has the knack of being able to explain extremely complex tax and estate planning issues in a manner that clients are easily able to understand and comprehend allowing them to confidently make important decisions.

Klenk Law Logo
Stars

Dylan Small

Peter provided outstanding advice and preparation of a will and trusts.

Klenk Law Logo
Stars

Klenk Law is an exceptional practice. Their fine lawyers and staff team up to produce excellent results for their clients. They excel at explaining the often cryptic laws and policies that govern estate planning right down to the complexities of the various "trust" frameworks. Peter himself manages each client together with his great team, and he has a rare quality to be both a walking encyclopedia of planning minutia and also one of the most likable lawyers I have ever had the pleasure of dealing with. He is truly generous in intellect and in his personal approach to getting the "big picture" for complex family structures. I trust him implicitly to help me make the right choices for the future. In short, Klenk Law is a gem of a firm.

Let us put our expertise to work for you.

Free consultation within 24 hours.