Types of Estate Planning Trusts
A trust is a legal document that acts as a container for assets. Just about any asset can be placed inside of a trust including bank accounts. A trustee manages the trust and a trustor is the individual who wants the trust created and transfers assets into it. Trusts are similar to wills insofar as they can be used to distribute assets upon your passing. You can name a beneficiary to a trust such as a spouse, child, or another loved one. You can also name a charitable organization as a trust beneficiary. Those named as beneficiaries are entitled to receive the assets placed into the trust. An advanced directive to the trustor will determine how the assets contained within the trust are distributed. In this article, the Dade City trust attorneys at The Law Office of Laurie R. Chane will discuss different types of trusts and how they relate to estate planning.
Revocable living trusts
There are two main categories that all trusts will fall into. These are revocable and irrevocable trusts. The big difference between them is that a revocable trust can be modified while an irrevocable trust cannot be.
Revocable trusts, also called revocable living trusts, allow you to maintain control of the assets within the trust during your lifetime. You can change the trust or even dissolve it. Hence, the term “revocable”.
A revocable trust allows you the flexibility to transfer assets into and out of the trust as you please. With a revocable living trust, you have the option of naming yourself as the trustee. You can also assign a successor trustee who inherits the assets held in the trust upon your passing.
Revocable living trusts are not subject to probate and have several advantages over wills as estate planning documents.
Irrevocable trusts
The major difference between a revocable and irrevocable trust is that an irrevocable trust cannot be modified after assets have passed into it. It is a good way to protect assets from creditors or others who may want to make claims on your assets. It also transfers assets outside of your estate which means you wouldn’t be liable for taxes on these assets. This type of trust may be useful to those with very large estates.
Advantages of trusts for estate planning
A trust has several benefits over using a will for estate planning. You might consider using a trust if you choose to:
- Avoid probate when passing on your assets
- Create a plan for managing your assets should you become incapacitated
- Place assets in a special needs trust for someone who cannot work
- Establish prerequisites for beneficiaries to receive their inheritance
- Reduce estate and gift taxes
Trusts are a legal vehicle to prepare for the future of your loved ones. They are the backbone of a solid estate plan.
Talk to a Dade City Estate Planning Attorney Today
The Law Office of Laurie R. Chane represents the interests of those seeking to establish trusts for their loved ones or for their own personal use. Call our office today to schedule an appointment, and we can begin discussing your needs right away.
