As you likely know, a will is an important part of your estate plan. Your will outlines instructions on how to manage your estate and who is responsible for doing so. These instructions may be simple and to the point, but that does not mean there can’t be issues during the probate process. Your will could be contested and taxed.
Many people avoid these issues by making trusts. A trust is a document similar to a will, except it can provide more security and allow you to make specific instructions. Here’s what you should know about different trusts:
Revocable trust
The most common kind of trust is revocable. You can add or remove assets and beneficiaries from a trust fund at any time with a revocable trust. This trust becomes irrevocable upon your passing.
Charitable trust
You can create a trust fund for the purpose of funding a charity or other organization. Assets in a charitable trust can be dispersed at regular intervals to prolong the support of an organization.
Spendthrift trust
If you have a beneficiary who is not financially insightful, then you could create a spendthrift trust to limit their spending.
Incentive trust
An incentive trust can be made with a condition that must be met before any beneficiaries access the funds. Some people use this to encourage a family member to apply for further education or get married.
Pet trust
If you have a pet that is expected to outlive you, you could place funds in a pet trust. These funds are used to help ensure your pet’s needs are always met.
It can be hard to choose the right trust for your estate plan. You can learn more about your estate planning options when you have legal help by your side.