A will is an important part of any estate plan — but it doesn’t have to be the focal point. Trusts have become increasingly popular vehicles for preserving wealth and passing it on to the next generation as people increasingly try to avoid the complicated (and expensive) process of probate.
There are a lot of different kinds of trusts out there, each suitable for different goals. If you’re just starting to consider the usefulness of a trust as part of your estate plans, it may help to have a passing familiarity with the following kinds.
Revocable trusts are pretty much exactly what they sound like: You retain control over them during your lifetime and can end them at any point. Their chief advantage is their flexibility — and the fact that the assets inside them are distributed according to the trust’s terms without going through probate.
Irrevocable trusts can’t be dissolved after they’re established — but that makes them hardy vehicles that can protect your assets against dissipation or misuse. They’re also particularly useful at reducing estate and gift taxes.
Maybe you hope to endow a scholarship, fund an animal shelter or do something else wonderful with your money once you’re gone. A charitable trust may help you with those plans (while simultaneously helping your reduce your taxes).
Special Needs trusts
If one of your heirs has a disability, you may want to establish this kind of trust to provide for their future without endangering their entitlement to certain federal and state benefits.
These kinds of trusts can help you handle the situation when you want to provide for an heir but are worried that their lack of maturity or another issue, like addiction, could cause a problem. The restrictions on the trust prevent the assets from being frittered away too quickly.
These are just some of the trusts available for use. If you’d like to discuss the value of a trust to your estate, make an appointment with an experienced attorney.