Establishing a trust is a valuable tool in the estate planner’s estate planning toolbox, however, too many estate planners may be unfamiliar with what trusts do. A trust is essentially the transfer of ownership of property to be managed by a trustee for the benefit of the beneficiaries designated by the estate planner.
Trusts can offer a variety of different benefits, including the avoidance of probate, tax benefits and can provide privacy and other benefits to estate planners as well. Because the probate process can result in delays and fees, it can be useful to understand how trusts can help with those concerns. As a result, estate planners should be familiar with the different categories and types of trusts.
What are the different categories of trusts?
- Revocable trust – revocable trusts are also sometimes referred to as living trusts. Revocable trusts can be altered, changed, modified or revoked. A revocable trust is created during the lifetime of the estate planner.
- Irrevocable trust – irrevocable trusts cannot be altered, changed, modified or revoked. Irrevocable trusts can provide better protections from creditors.
What are the different types of trusts?
There are several different types of trusts that can be useful for estate planners depending on what their needs and goals are for the trust and their overall estate plan. Examples of different types of trusts include:
- Special Needs Trusts
- Charitable Trusts
- Spendthrift Trusts
- Asset Protection Trusts
- Constructive Trusts; and others
Trusts can be used alone or in conjunction with a will. Trusts can also be created in a will. They can help provide for family members and loved ones during the lifetime of the estate planner or after their death which is why estate planners should be familiar with their benefits.