If you are drafting your estate plan, you may want to consider adding a trust. A trust is a legal vehicle that allows you to distribute assets to beneficiaries after you pass away. A trust is much like a will, but it typically offers superior asset protection against probate, disputes, estate taxes and debt collectors with the help of a trustee.
There are several types of trusts you can add to your estate plan. Each one allows you to decide when your assets are distributed. Here is what you should know:
5 basic trusts you may want to consider
When drafting a trust, it is important to understand the different kinds of trusts. There are several types of trusts that do different things. Some trusts you can draft include the following:
- Revocable trust: This kind of trust can be created, altered and revoked at any time, allowing you to adjust the contents and terms of the trust.
- Irrevocable trust: This kind of trust typically cannot be altered once it is created. A revocable trust becomes irrevocable after you pass away to protect assets.
- Incentive trust: You can limit access to trust funds by using an incentive trust. Your beneficiaries may need to meet certain terms, such as going to school, before accessing trust funds.
- Generation-skipping trust: You can use this kind of trust to distribute assets to grandchildren and great-grandchildren, creating generational wealth.
- Charitable trust: You can use this kind of trust to distribute funds to charities for several years.
If you want to learn more about trusts, you can reach out for professional legal guidance for help. While the basics of trusts are mentioned above, trusts are highly customizable to meet individual needs. Once you understand your goals for your estate, you can find the right trust to make those goals happen.