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Does your estate plan need a trust? 

On Behalf of | Feb 12, 2024 | Estate Planning

The most basic document in your estate plan is your will. Your will instructs how your assets should be distributed and who should benefit from them after you pass away. Your estate plan can also include a trust. 

A trust is a legal arrangement where a grantor entrusts assets to a trustee until they are instructed to distribute them to beneficiaries. A trust can help avoid issues that a will might have, such as estate taxes or disputes. You can also make a trust with unique legal language to curate how assets should be managed. Here’s what you should know:

5 trusts to consider making

There are many kinds of trusts. Here are a few common trusts you may make:

  • Incentive trust: This trust allows you to create parameters that must be met before assets are distributed. This encourages a beneficiary to meet certain expectations and be rewarded for doing so. For example, a beneficiary may only gain funds from an incentive trust if they go to college or marry. 
  • Pet trust: Assets in a trust can be exclusively used for the continued care of a pet. Funds in a pet trust may be used for a pet’s food, shelter or clothing,  including providing their medical treatments, grooming and daily care.
  • Charitable trust: You may wish to put funds in a charitable trust to give to private organizations, non-profits, research programs or communities. These assets can be distributed at regular intervals. 
  • Spendthrift trust: A beneficiary may not be good with finances. A spendthrift trust can limit how many assets a beneficiary can assess so they can live comfortably without wasting their inheritance. 
  • Special needs trust: A beneficiary who receives health or income benefits, such as supplemented income could lose their benefits if they inherit a large estate. A special needs trust can limit the funds a beneficiary has access to so they can retain their benefits.

You may need to reach out for legal help to learn more about your estate planning options.