Getting your estate plan in order can help you to provide for your loved ones even after you pass away. There are several tools that you have at your disposal to do this. One of these is a trust. There are many different types of trusts, but they’re all categorized as either revocable or irrevocable. Those two categories are important because they describe some of the basic points related to the trusts.
A revocable trust is one that you can change or dissolve as long as you’re alive. You’re in control of the trust and the assets in it. Because of this, a revocable trust doesn’t provide you with any protection from creditors. This means that creditors can make claims against these trusts if you owe money.
An irrevocable trust is one that you can’t change or dissolve once it’s created and funded. This provides you and the beneficiaries protection from creditors because no creditors can make claims against it. Of particular interest to some individuals is the special needs trust, which falls under this category.
The special needs trust is useful for individuals who want to help care for someone who relies on needs-based programs like Medicaid. The beneficiary never has direct access to the trust’s assets. Instead, they are controlled and distributed by the trustee. This type of trust won’t count toward the person’s assets, so they won’t risk losing their assistance, but you can still help to care for them.
You must ensure that trusts are set up properly. Your attorney can help you to determine what type of trust is appropriate for your situation and work to get it established.