In the world of estate planning, there are dozens of different documents that cover a wide range of needs. Many people are familiar with wills and advanced healthcare directives, since these apply to the vast majority of individuals. However, there is another important aspect of estate planning that too many people assume isn’t useful for them: trusts. Trusts, as a whole, provide ways to manage finances both during life and after death. These contracts partition money or other assets, to be managed by someone called the “trustee,” and distributed according to your wishes. Depending on your asset portfolio, family structure, charitable goals, and other life circumstances, a trust may be just the thing you need to feel financially secure.
Trusts are often used to manage large estates, provide for beneficiaries, and to avoid the hassles of probate. In basic terms, a trust is a right in property, held in a relationship between the trustmaker and the trustee, for the benefit of a beneficiary (individual or company).
Under the umbrella of trusts, most are organized into one of two groups: revocable and irrevocable. As one might assume, revocable trusts are those that can be altered, modified, or revoked entirely by the trustmaker, during his or her lifetime. These are also called “living trusts.” An irrevocable trust is simply the opposite, meaning that nobody can make changes or revoke the trust after it is set in place.
Outside of these two basic distinctions, there are many types of trusts, each designed to meet a particular need.
- Charitable trust
This is a trust set up for a specific charity, or for the public good. These are helpful in lowering or avoiding estate and gift tax. Ask your local estate planning attorney in Greensboro about setting up a Charitable Remainder Trust (CRT) for even more benefits.
- Asset protection trust
If you wish to insulate your assets from creditors, and other future claims against those assets, a protection trust may be right for you. These trusts are often set up in countries outside of the U.S. (but not always), and typically start out as irrevocable for a certain number of years.
- Special needs trust
For those with beneficiaires that receive government benefits, setting up a special needs trust may be able to legally supplement those benefits, without jeopardizing their eligibility.
There are many types of trusts, and these three are only just the beginning. If you want to learn more about trusts and how they can fit into your Greensboro estate plan, reach out to us at the law office of E.J. Boswell. Ask for your free consultation to get started.