If you are creating an estate plan, it is important to carefully evaluate the different tools available to distribute assets after you pass away. One of these tools is a trust, which requires the grantor, or the creator of the trust, to put assets into the trust, which will be controlled by a trustee. The trustee will then be responsible for distributing the assets to the beneficiaries.
The type of trust you choose for your estate plan will depend on your individual needs and the needs of your family. Here are some of the most common trusts used in estate plans.
Revocable trusts
Living or revocable trusts are created during the trust creator’s lifetime and can be modified or revoked at any point during his or her lifetime. Any property that is put into a revocable trust will become the property of the trust itself, and therefore will not be subjected to probate upon the creator’s death. However, during the creator’s lifetime, the trust’s assets will still be available to creditors if the creditors can get a court order.
Irrevocable trusts
Unlike a revocable trust, an irrevocable trust cannot be modified or revoked once it has been created. However, it can be used for survivorship life insurance and serve as a way to protect your assets from estate and gift taxes and creditor claims.
Constructive trusts
The court can determine that there is an implied trust, or constructive trust, even if the trust was not formally created, if the court can determine what the owner of the property’s intentions were for the property.
Special needs trust
A special needs trust protects the beneficiary’s eligibility so that the beneficiary can still receive government/disability benefits even while receiving the benefits of the trust.
With so many types of trusts available, it may be in your best interest to contact an estate planning attorney to discuss which trusts are best for you and your beneficiaries.
