If you have been reading our blog, or have ever spent any time talking to an estate planning attorney, you probably know that estate plans often rely on many kinds of trusts. But why is this? Why are there so many different kinds of trust in the first place? Why might your estate plan include multiple kinds of trusts instead of a single trust, or none at all?
In today’s blog entry, we are going to take a closer look at why there are so many trusts available, and why they are so beneficial. As always, talking to your estate planning attorney about specific questions you might have is essential if you need legal advice.
So Many Trusts
One of the main reasons why there are so many different kinds of trusts is because trusts are incredibly flexible tools. Not only can you create different kinds of trusts for different purposes, but you can also create different trusts that take effect at different times.
For example, if you want to protect the inheritances you leave for minor children through your last will and testament, you can direct your will to establish a trust to protect those inheritances after you die. Because this kind of trust only takes effect after you die, and is established through your will, it is known as a testamentary trust.
Contrast this against the trust you create that takes effect immediately. For example, if you create a revocable living trust, you create a tool that allows you to transfer property into the trust’s name so that the trust can distribute it after you die, instead of requiring the property to first go through the probate process. Because this kind of trust takes effect while you are still alive, it’s known as a living trust.
Further, revocable trusts have terms that you can change, while irrevocable trusts have terms that, once the trust takes effect, are mostly permanent.
So Many Benefits
The specific kinds of trusts that you might choose to include in your estate plan will differ significantly based on the kinds of benefits you want to achieve. We’ve already talked about the probate avoidance benefits provided by a revocable living trust, but you might also be able to use the trust to reduce or eliminate any potential estate taxes your state might have to pay, protect the ability of a child or adult with disabilities to benefit from government programs while still receiving financial support from you, and many other benefits that one of our attorneys can explain to you.
In fact, there are so many different types of trusts available today that it’s really only feasible for you to determine which trust you need by talking to your attorney and evaluating your options.
Contact Hammond Law Group to schedule a FREE personal consultation with one of our attorneys to find out which trust is best for you!