There are many advantages to creating a personal trust. It can help you avoid probate and ensure your assets are bestowed to the right people.
However, the number of options available when considering creating a trust can be intimidating. Here are a few common trusts, and what they entail:
Irrevocable trusts are rigid. Once created, they do not let you alter assets or change the trustees.
The rules around this trust are strict, but it can be useful in some situations. They can minimize what you pay in estate taxes or enable you to qualify for government programs like Medicaid.
These trusts, as the title implies, are flexible. You can change the included assets or modify the trustees. Even better, after creating a revocable trust you can still access included assets.
Sometimes referred to as a living trust, these are most common for those who want to avoid probate. They allow you to distribute your assets as you like while keeping them available in case you need them.
As the name says, this trust skips a generation when distributing assets. It enables you to transfer benefits directly to your grandchildren.
While your children may not receive any assets directly under these trusts, you can direct money to be used for anything benefiting your grandchildren. Their parents can receive money for things like living expenses or healthcare.
A trust created specifically to benefit charity. Charitable trusts can support a specific cause or organization. They can also serve the general public.
The benefit of this type of trust is it can reduce the amount you pay in estate or gift taxes while giving back to your community or a special organization.
These are just a few of the options available to you when considering the best way to manage your estate. If you have any questions about creating a trust or estate planning in general, an attorney skilled in estate law can help.