Creating an estate plan is one of the most important tasks an adult has. This is the opportunity to make your wishes known about which beneficiaries you want to receive which assets when you pass away.
One option you have to do this is using trusts, which are a legal tool that allows you to set specific criteria for how the assets are handled. Understanding a bit about these trusts is critical so you can ensure you make the decisions that are in your best interests and your beneficiaries’ best interests.
Categories and types of trusts
There are two primary categories of trusts—revocable and irrevocable. Both types of trusts bypass the probate process, which means your loved ones have privacy regarding their inheritance.
A revocable trust can be changed as you desire, but the protections are severely limited. An irrevocable trust is one that you can’t change once you establish it, unless your beneficiaries or the court agrees to the change. The permanency of the irrevocable trust comes with considerable protections, including an inability of your creditors to claim the assets within the trust.
There are several different types of trusts that are nestled within each of these categories. These all serve specific purposes that must be considered before they are established.
It’s critical to work with someone who’s familiar with estate planning and trusts so you know that you’re doing what you feel is best for your loved ones. Getting your estate plan together as soon as possible can give you peace of mind since you know your wishes will be lawfully relayed.