Did you know that a will by itself may not protect your legacy? With only a will in your estate plan, your estate could be compromised by probate, disputes and taxes. You can more effectively protect your assets with the use of a trust.
A trust is a legal arrangement between you and a trustee. The trustee has a fiduciary duty to protect trust funds and distribute assets according to its terms. The following a few trust options you may consider adding to your estate plan.
Revocable trust
A revocable trust is a common type of legal document that allows you to add or remove funds at any time. You can also revoke the trust and start a new trust without any issues. Once you pass away, a revocable trust becomes irrevocable.
Irrevocable trust
You could also establish an irrevocable trust. Unlike a revocable trust, this kind of trust cannot be easily altered after it is drafted. You may only alter an irrevocable trust after gaining permission from the beneficiaries. This trust can protect your assets from debt collectors and estate taxes.
Spendthrift trust
If you believe your beneficiaries would struggle to maintain their inheritance, you could create a spendthrift trust. A spendthrift trust allows you to limit a beneficiary’s access to trust funds.
Special needs trust
If you have a beneficiary who receives special needs benefits, such as health insurance or supplemental income, you may consider making a special needs trust. This kind of trust limits a beneficiary’s inheritance in ways that protect them from losing special needs benefits.
There are many other types of trusts, including generation-skipping trusts, incentive trusts and charitable trusts to name a few. You can explore your legal options as you draft your estate plan in order to choose the best options for you.
