An estate plan helps establish what happens to your assets after you pass away. For example, you may want your spouse to inherit your entire estate. You may split your estate among your children. You can use a will to codify who inherits your assets. However, a will may be subject to probate and disputes. You can help avoid these issues with a trust.
A trust is a legal arrangement that allows you to put your assets in the name of a trust. You also name a trustee to be responsible for managing your assets and distributing them to your loved ones. There are many different kinds of trusts that can benefit you and your loved ones.
How can a trust benefit your loved ones?
When determining what kind of trust is appropriate, it is important to consider what you want it to accomplish. Do you want to distribute assets immediately after you pass away? Do you want to create trust funds for your children or grandchildren? Here are a few types of trusts to consider:
- Revocable living trust: One of the most common types of trusts, a revocable living trust can be altered or revoked while you are alive. This allows you to make adjustments to the terms or contents of it. When you pass away, the trust becomes irrevocable and cannot be altered.
- Incentive trust: You can set terms that limit access to trust funds with an incentive trust. For example, you can use this trust to only distribute funds to beneficiaries who enroll in college.
- Generation-skipping trust (GST): Trust funds can be used for multiple generations with a GST. This distributes funds to grandchildren and great-grandchildren or anyone who is at least one generation or 37.5 years removed from the grantor (the person who establishes the trust).
To learn more about trusts and determine which kind fit your and your family’s needs, reach out for experienced legal guidance.