When thinking about the future, you may wonder what would happen to your assets after you have passed on. Thinking about a time when you are gone from your loved ones is not a task anyone wants to partake in willingly, but in order to ensure the cherished people in your life are taken care of after your departure, it is vital to have an estate plan written. As a top-rated trust lawyer explains, here are just a few of the many types of trusts that are available for use.
Revocable or Irrevocable Trust
A trust that may be updated or revoked at any time is called a revocable trust. It can be edited at any point, permitting the grantor is still alive and is mentally competent when doing so. By comparison, an irrevocable trust cannot be altered without consent from every beneficiary. It may seem like irrevocable trusts are not a good idea, however, most people do so for the tax benefits specifically. This can also protect their estate from creditors and lawsuits.
A living trust is just another term for a revocable trust. It is written by the grantor, and used throughout their lifetime, with the intention to benefit beneficiaries after they have passed on. A living trust can help your loved ones prevent the expensive and prolonged nature of probate, but are not effective in asset protection while alive. Some assets would be more difficult to access, but they could still get into the hands of creditors during the grantor’s lifetime.
A trust that is established to benefit a charity organization is called a charitable trust. This is a type of irrevocable trust that is available for use, and can offer tax benefits while still earning income. When writing a charitable trust, you will choose the charity organization to be the trustee. As they invest, reinvest, or liquidate, a form of revenue can be created. If there is a charity organization that means something to you or you want to give back in some way, a charitable trust is a great option.
Special Needs Trust
A special needs trust is written with the intention of supporting someone with a mental or physical disability who requires lifelong assistance. For example, a family member who suffered a life-altering personal injury, or was a victim of medical malpractice, rendering them permanently disabled. Trusts can provide monetary support without risking supplemental government aid eligibility, such as Medicaid or SSI. There are three types of special needs trusts, and which you devise will depend on the type of need and individual circumstances. If you have questions about writing a special needs trust, consider speaking with a lawyer near you, such as the team from Carpenter & Lewis PLLC.
A living trust where beneficiaries do not have any prior details or knowledge about the trust assets is called a blind trust. Who you choose as trustee will have full control over assets and its distribution. The grantor must have complete faith in the trustee they appoint, as they are essentially relinquishing control over their own assets for the benefit of having a blind trust. If you anticipate conflicts of interest or disagreements between beneficiaries, then a blind trust could be useful for you.