A will may have to face estate taxes, probate and disputes, which might make it more difficult for heirs to inherit the deceased person’s property.
A trust, by comparison, can avoid estate taxes and help insulate what you want to leave behind to your heirs from creditors’ claims. Assets in trust also bypass the probate process, making them more immediately available to your heirs.
When planning a trust, here are several you may consider making:
1. Revocable trust
Revocable trusts are the most prevalent type of trust. After being established, a revocable trust may be changed or revoked at any moment. A grantor, for instance, might change the beneficiaries or add assets to a revocable trust.
2. Irrevocable trust
The revocable trust becomes irreversible once a grantor dies, meaning it cannot be changed or revoked. While still living, a grantor can create an irrevocable trust that cannot be changed without the consent of the beneficiaries.
3. Pet trusts
Some people want to establish pet trusts to hold funds for their pets’ welfare. A pet trust’s assets can only be used for the animal’s benefit, such as for its food, grooming, and medical care.
4. Generation-skipping trust
Assets can be placed in a generation-skipping trust to be used by the grandchildren. A generation-skipping trust can have restrictions so that assets can only be utilized for specific purposes, such as funding for higher education.
5. Special needs trust
Trusts may have a detrimental impact on some individuals, particularly if they receive special needs assistance. Making a special needs trust might help people avoid situations where they might lose their health insurance or additional income by limiting how assets are distributed to heirs.
6. Charitable trust
A lot of individuals want to give back to their communities, and they may do so by using charitable trusts. Charitable trusts are often used to give assets to individual groups or charities.
Estate planning is a complicated process that often requires a deep understanding of the law. If you’re ready to get your estate plans in order, find out more about your options.