People who are creating an estate plan need to think about the options they have for passing their assets along to their loved ones. This can occur through the pre-death gifts, will designations or trusts, for example. For many, the control and benefits that come with trusts make them a particularly attraction option.
There are different types of trusts available, each of which serve a different purpose. It’s critical for you to think about your goals and the specific pros and cons of each type of trust to determine which is the best one for you.
Revocable versus irrevocable trusts
One of the first things you’ll encounter when you’re looking into trusts is whether a specific option is revocable or irrevocable. A revocable trust is one that you can change as you see fit. An irrevocable trust is one that you can’t change unless the beneficiaries or court deem it necessary.
Specific considerations
Trusts have specific purposes that you have to consider. For example, a special needs trust can help you to care for someone who relies on needs-based programs without affecting their eligibility. Consider your goals for the trust and the circumstances surrounding the distribution of assets to determine which is the best option for your needs.
Benefits of a trust
Trusts have many benefits, including allowing you to set up specific terms for them. They also don’t go through the probate process, so your beneficiaries will have more privacy. Some trusts have other benefits. For example, an irrevocable trust protects the contents from claims from your creditors or court judgements against you. This is because you relinquish control of the assets when you establish and fund the trust.
Ultimately, trusts are an important part of a comprehensive estate plan. Yet, a trust should be balanced with other components, such as a will and power of attorney designations. Getting this taken care of as quickly as possible can allow you to have a greater since of peace since you know that you’re caring for interests and your loved ones as best as possible by having everything in order.