Wills are vulnerable to estate taxes, complicated probate processes and disputes. To avoid this many people creating their estate plans will make trusts. A trust puts assets in the protection of a trustee. When the time comes, the trustee is responsible for administering the assets according to the trust.
If you’re considering making a trust, you may need to be aware of the different kinds of trusts out there, because there are many. Here are four to consider:
1. Revocable trusts
Also known as living trusts, a revocable trust allows the grantor to make adjustments if they decide to add or remove beneficiaries. Grantors can also revoke a trust if they need to entirely remove a beneficiary or want to establish a trust.
A revocable trust is often made to avoid probate, which can be a lengthy and difficult process. Grantors can also include instructions as to how and when assets are distributed to beneficiaries. For example, a beneficiary could only use the assets for college purposes.
2. Irrevocable trusts
Alternatively, the grantor can make an irrevocable trust that can’t be altered or revoked once created. When the grantor dies, a revocable trust typically becomes irrevocable, but funding an irrevocable trust during your lifetime can offer superior asset protection.
3. Special needs trust
People with special needs are often on benefit programs. As a result, if they inherited from a trust, then they could lose their government benefits. To avoid this issue, grantors can create special needs trust that would give beneficiaries just enough assets so they keep their special needs benefits.
4. Pet trust
Many people leave pets behind when they pass away. As a result, their pets may need someone else to care for them. Grantors can create a pet trust so that their pets’ caretaker has the funds to care for the animals’ needs and wants.
There are many other kinds of trusts at your disposal. It may help to reach out for legal help to learn about your options.