Whether you have many or no assets, having an estate plan is important because it ensures the carrying out of your wishes.
You can include a variety of documents in your plan, but trusts are an excellent place to start.
Different types of trusts
You can choose one or more trusts to address various needs for your asset distribution. Types include:
- A revocable trust allows changes to the terms during your lifetime.
- An irrevocable trust does not allow you to make changes once you sign.
- A living trust takes effect while you are alive, meaning the assets you name go into the trust immediately.
- A testamentary trust transfers your assets into the trust only after you die.
There are also specialty trusts used under specific circumstances. For example, you can use a spendthrift trust to leave assets to a young person who may not yet be mature enough to manage them. In this case, a trustee would manage the trust until they are of age.
Benefits of having a trust
Including a trust benefits you and your family, and the different types have some unique benefits. For example, a living trust allows you to change the terms while you are alive, giving you full control. Your assets will also pass privately without the hassle and costs associated with the probate court. The probate process is public and allows people to contest the terms you establish in a will.
Having a trust guarantees that the trustee will distribute your assets exactly as you wanted when you listed beneficiaries.