Creating an estate plan is an intensive process that requires you to take stock of all your assets and determine what’s going to happen to each one. You can do this using your will, but many people choose to set up trusts. These bypass the court’s probate process, so they can get the beneficiaries their inheritance faster and with less expense.
Deciding you want a trust is the easy part of the process. The more difficult part is determining which specific trust is the best to meet your needs and plans. There are several different types of trusts that you may have to consider. These all have a specific purpose so it’s best to work with someone who’s familiar with them so you can establish the right ones.
Type of trust
There are two main categories of trusts, irrevocable and revocable, but each of those has many different types. They are typically named after the purpose for or use of the trust. For example, a special needs trust is an irrevocable trust that enables the creator to care for a person who’s reliant on asset-based programs without impacting the ability of the person to receive the benefits from the program.
Other types of trusts include:
- Charitable remainder annuity trusts
- Life insurance trusts
- Generation-skipping trusts
- Domestic asset protection trusts
Your estate plan shouldn’t leave any room for your loved ones to guess what you wanted. It’s a good idea to discuss your plan with them while you can so they have the opportunity to ask you questions if anything is unclear. Doing this as soon as possible is necessary so you have it in place if you’re ever incapacitated or pass away unexpectedly.