Did you know that your will may not be the most important document in your estate plan to protect your legacy? Your estate could be contested and taxed if you only have a will. If you wish to help ensure your loved ones receive their full inheritance, then you may want to include a trust in your estate plan.
You can create a trust and move assets into it. The trust will then own those assets, rather than you. You should pick someone you can confide in to assume the role of trustee. They have a duty to manage and distribute assets as per the instructions you give when creating the trust.
There are several types of trusts that provide unique options depending on your wishes. Here is what you should know:
Revocable and irrevocable trusts
One of the most common types of trust is a revocable trust. This allows you to add or remove funds to a trust at any time. Once you pass away, a revocable trust becomes irrevocable, which can help protect assets from disputes and taxes.
You can also make a trust irrevocable from the start. While it offers better protection to the assets than a revocable one, you will lose the flexibility to make changes.
Charitable trust
You may be part of a private organization, charitable group or research program. You could set up a charitable trust to fund these organizations after your passing. A charitable trust can distribute assets in a one-time payment or at regular intervals.
Generation-skipping trust
You can set up a trust for the benefit of your grandchildren, so that certain assets will be kept for them, rather than their parent (your child). This can help avoid estate taxes so that your loved ones receive the full amount of their inheritance.
Incentive trust
You may want to protect your assets from being misused and poorly invested. You can set up an incentive trust to encourage your beneficiaries to set life goals, such as going to college, if they wish to receive an inheritance.
You can explore your trust options by reaching out for legal help.