What are some different types of trusts?

On Behalf of | Apr 19, 2024 | Trusts |

When it comes to managing assets, trusts offer a valuable solution. Trusts come in various types, each designed to cater to unique needs.

Understanding the distinctions between these types can help individuals make informed decisions about their estate planning.

Testamentary trusts

Testamentary trusts are part of a will and start working after the person who made the will dies. This type of trust lets people say how they want their assets handled and given out after they die. It is useful for taking care of people who might still be young or need special help.

Revocable trusts

Revocable trusts are flexible because people can change or cancel them while they are still alive. Assets put into a revocable trust stay under that person’s control until they die or cannot make decisions anymore. This type of trust makes it easy to manage assets and avoids a complicated legal process called probate.

Irrevocable trusts

Irrevocable trusts are very hard to change. Assets moved into an irrevocable trust are no longer counted as part of a person’s estate, which can have tax benefits and protect the assets from creditors. This type of trust is often used for charitable reasons, planning for estate taxes or keeping assets safe.

Special needs trusts

Special needs trusts can provide financial support to individuals with disabilities without jeopardizing their eligibility for government assistance programs. By placing assets into a special needs trust, beneficiaries can receive supplemental support while still qualifying for important benefits.

Knowing more about these options can give a person peace of mind. Choosing the right type of trust is a way to help individuals achieve their goals and secure their legacy for future generations.