As you look over your estate plan, one tool that you don’t want to forget about is a trust. Trusts come in a number of forms, but they have a few important purposes. They can help you protect your legacy, control your wealth, pass on your assets and protect your privacy. They can also help your family avoid probate after you pass away, so they get the assets you’re leaving for them sooner.
The nice thing about trusts is that there are so many of them. There is a different trust for almost any kind of situation. For example, you could set up a marital trust to help protect your surviving spouse or a charitable lead trust to pass on assets to a charity along with your beneficiaries.
The two main forms of trusts offer different protections to you
Before choosing the kind of trust you want, you should know the two main forms. These include the revocable and irrevocable forms.
Revocable trusts are also known as living trusts. These are able to be changed at any time during your life and are extremely flexible. You’ll retain control over them, but they’ll also help your loved ones avoid probate if you pass away.
Irrevocable trusts are more protective, because once they’re created, they cannot be altered. They transfer your assets out of your estate and can help you avoid estate taxes. Additionally, your assets may be protected against collections or creditors’ attempts to collect debts in the future. You do lose control over the assets in an irrevocable trust, but the benefits are great if you’re looking to reduce your estate’s overall value and plan for Medicaid, for example.
There are plenty of options to learn about
With trusts, there are many options for you to consider. It is worth taking some time to go over the different trusts and benefits of each, so you can decide which one is right for you. It may be that several trusts need to be used for the most protection, which is something you can discuss as you work on your estate plan.