A trust is a legal document that allows grantors to place assets in the protection of trustees. Trustees are then responsible for the distribution of the assets per the grantors’ instruction.
The reason people make trusts is because they are often more versatile than wills. A will can be subjected to estate taxes, probate and disputes, which can make it harder for heirs to benefit from the deceased’s estate.
There are many kinds of trusts. Here are some that you may want to know about:
1. Revocable trusts
The most common kind of trust is a revocable trust. A revocable trust can be altered or revoked at any time after being made. For example, grantors could add assets or remove beneficiaries from a revocable trust.
2. Irrevocable trusts
If established the right way, a revocable trust can become irrevocable upon the grantor’s death, meaning it can’t be altered or revoked. A grantor can also make an irrevocable trust while they’re alive that can’t be revoked without the permission of the beneficiaries.
3. Pet trusts
Some people wish to leave behind assets for the care of their pets in pet trusts. Assets in a pet trust can only be used for the benefit of the pet, such as their food, grooming and vet visits.
4. Generation-skipping trusts
Assets can be put in a generation-skipping trust to be used by grandchildren, for example. Conditions can be put on a generation-skipping trust so that assets can only be used for special reasons, such as college funds.
5. Special needs trusts
Some people can be negatively affected by trusts, especially if they receive special needs benefits. A special needs trust can be made to avoid issues that would cause someone to lose their supplemental income or health insurance.
6. Charitable trusts
Many people wish to give back to their communities and can use charitable trusts to do so. These trusts would give assets to charitable organizations and nonprofits.
When learning about your estate planning options, it can help to reach out for legal help.