There are a lot of options when creating an estate plan. While that means that you have the flexibility to create the estate plan that’s right for you, your estate, and your heirs and beneficiaries, some people find the menu of options overwhelming. As a result, some individuals end up putting off creating an estate plan until it’s too late, while others simply go with the most basic estate plan. Both of these options pose risks, though.
To ensure that you’re protecting your interests as much as you can, you need to educate yourself about what you can do with the various estate planning options at your disposal. To assist you, this week we wanted to take a quick look at some of the various trust options that are available to you. Just keep in mind that this isn’t legal advice, so if you want to learn more about how to craft an estate plan that is right for you, then it’s probably best to reach out to an experienced attorney.
The trusts you can use in your estate plan
There are a various trusts that you can use to supplement your will and create a more holistic estate plan. Here are just some that you may want to consider incorporating into your estate plan:
- Spendthrift trust: This trust is aimed at protecting your assets from being immediately disposed of by your named beneficiary. Here, the trustee will make periodic disbursements in accordance with your wishes, and the trust’s assets will be protected from creditors while they remain within the trust.
- Discretionary trust: With this type of trust, you give the trustee who manages the trust the power to determine when assets should be released to a named beneficiary. This, again, helps ensure that your assets aren’t quickly squandered away.
- Incentive trust: With this type of trust, you place conditions on the release of trust assets, which could be anything from your beneficiary graduating college to getting married, having a child, or even holding a full-time job for a specified period of time. Therefore, you use your wealth to motivate your loved one to achieve a goal that you’ve identified for them.
- Remainder trust: This trust allows you to retain control over the distribution of your assets longer. Typically with this kind of trust, you leave assets to one beneficiary with instructions that whatever is left over in the trust when that initial beneficiary passes away will be inherited by a second beneficiary. This type of trust can be especially useful in a blended family.
- Charitable trust. This trust allows you to provide long-term support to a charitable endeavor of your choosing.
- Pet trust: If you have a beloved pet, then you can use this type of trust to ensure that there are funds in place to cover the cost of their care even after you’re gone.
There are numerous other trust types out there that you can use to protect your assets from creditors, reduce estate taxes, and take care of those who have special medical needs. By forgoing those trusts that are right for you, you could be subjecting your estate and your loved ones to unnecessary costs and delays.
Know how to create the estate plan that’s right for you
The estate planning process has a lot to give. However, to get everything you can out of it, you need to be informed and proactive. An attorney can help you on both of those fronts so that you can develop an estate planning strategy that adequately protects you, your estate, and your loved ones.