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Simple English definitions for legal terms
contingent trust
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A quick definition of contingent trust:
A contingent trust is a special kind of trust that can only be created if certain conditions are met. This means that someone has to follow specific instructions in their will for the trust to be set up. The instructions will say which assets should go into the trust, who the beneficiaries are, and what the conditions are for the trust to be created. By using a contingent trust, the person can control how their assets are distributed and avoid some of the costs of probate. People usually create a contingent trust for their kids or someone who is unable to take care of themselves. This way, a trustee can make sure that the beneficiaries use the assets according to the person's wishes instead of what a court-appointed guardian decides.
A more thorough explanation:
A contingent trust is a type of trust that can only be created if certain conditions are met as specified in a person's will. The grantor outlines the conditions that must be met, the assets that will go into the trust, and the beneficiaries who will receive the assets.
One common reason for creating a contingent trust is to provide for children or an incapacitated beneficiary. For example, parents may create a contingent trust in their wills to ensure that their assets are managed and distributed according to their wishes if they both die at the same time. This would prevent a court-appointed guardian from making decisions about the assets on behalf of the beneficiaries.
By using a contingent trust, the grantor can maintain control over how their assets are distributed and avoid some of the costs associated with probate.
Overall, a contingent trust is a useful estate planning tool that allows individuals to ensure that their assets are distributed according to their wishes and that their loved ones are provided for in the event of their death.