Understanding Interest in Possession Trust: Rights and Benefits
Definition & Meaning
An interest in possession trust is a type of trust that grants a beneficiary the immediate right to receive income generated by the trust assets. This means the beneficiary can enjoy the benefits of the trust property, such as receiving payments or distributions from the trust. These trusts are often established through a will and are commonly used to provide financial support to a surviving spouse. Upon the death of the surviving spouse, the remaining trust assets typically pass to the couple's children or other designated individuals. Interest in possession trusts can be set for a specific duration, an indefinite period, or for the lifetime of the beneficiary.
Legal Use & context
Interest in possession trusts are primarily used in estate planning and family law. They help manage the distribution of assets after a person's death, ensuring that beneficiaries receive income while protecting the capital for future heirs. Users can often create these trusts using legal templates available through services like US Legal Forms, which provide guidance on the necessary steps and documentation.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A couple creates an interest in possession trust in their will, allowing the surviving spouse to receive all income generated from the trust during their lifetime. After the spouse passes away, the remaining assets are distributed to their children.
Example 2: A parent establishes an interest in possession trust for their child, providing them with access to the trust income until they reach a certain age, at which point the capital will be transferred to them. (hypothetical example)