There are many kinds of trusts that you can use in your estate plan. A trust is designed to hold your assets, but depending on the kind of trust you use, what happens with those assets and the protections you receive may vary.
Some of the most common kinds of trusts that you’ll see used in estate plans include:
- Irrevocable trusts
- Revocable trusts
- Special needs trusts
These are just three of many kinds of trusts, but they are often used and most commonly needed in estate plans.
What benefits do these trusts offer?
Trusts have different benefits depending on what they are. Here’s more about each of these three.
Among the three types of trusts above, the most commonly used trust is a revocable trust. This is used often because it offers a place to hold assets that can be altered when needed. This trust holds assets that pass on to beneficiaries based on the trustor’s trust agreement. Revocable trusts may be revoked or altered at any time.
Comparatively, there is the irrevocable trust. This trust is designed in a way that is more permanent. Once assets are added to an irrevocable trust, they cannot be removed. The trust cannot be changed or revoked, but some limited changes may be possible if specific circumstances have been met. These trusts offer good protection against creditors.
Special needs trusts
Finally, there are special needs trusts. These trusts hold assets for minor or adult beneficiaries with special needs. With these trusts, it’s possible to leave an inheritance without impacting the person’s right to state or government benefits.
Do you want to include a trust in your estate plan?
These are three kinds of trusts to consider if you’re setting up your estate plan. Everyone’s situation is a little different, so you will want to discuss your finances and your plans for leaving behind an inheritance with your attorney. Doing this will make it easier to know which of these trusts you want to use or if you should choose to use more than one type in your estate plan.