There can be a lot of moving parts in an estate plan and creating an effective and appropriate plan can require attention to detail. That’s why many people put off estate planning. But procrastinating can put you, your estate, and your loved ones at risk.
If you want to protect your assets and your loved ones’ futures, then you should educate yourself about your estate planning options. While an attorney who is experienced in estate planning can help walk you through the process and custom tailor a strategy that works best for your set of circumstances, we hope that this brief look at some of the various trust types available to you will be informative.
Assessing your trust options
Creating a trust can give you a lot of control over how your assets are distributed and used. Here are just some of the options that are at your disposal:
- Special needs trust: This type of trust is meant to provide financial support to a loved one without affecting his or her ability to qualify for certain government programs like Medicaid. A special needs trust is able to do so because assets distributed out of the trust do not count as income so long as they are used in a certain way. The appropriate uses of these assets are broad, which is another appealing aspect of this type of trust.
- Incentive trust: This trust disburses periodic payments to a named beneficiary but holds back release of all of the trust’s assets until a triggering event occurs. This triggering event can be just about anything, but most people who create this type of trust tie the release of assets to events like marriage, the birth of a child, or graduation from college.
- Spendthrift trust: This trust is meant to ensure that assets aren’t misused and therefore typically specifies that limited disbursements are to be made over time.
- Charitable trust: This trust focuses on giving to a cause that is important to you. There are various ways that you can structure this trust to ensure that you’re giving the long-term support that you hope to provide.
- Remainder trust: This type of trust makes payments to a beneficiary for a specified period of time, at which point the remainder of the trust is distributed elsewhere. This type of trust can be helpful when you want to support a loved one but also give to a charitable cause, or if you’re in a blended family and want to protect your children from another relationship.
- Generation-skipping trust: This trust distributes assets directly to your grandchildren, thereby skipping over your own children. There can be tax benefits to using this type of trust, but it also doesn’t completely cut your own children out given that they still have access to the trust’s funds.
What estate planning strategy is right for you?
Ultimately, this is a question that only you can answer. However, an attorney who is well-versed in this area of the law can help you navigate your estate planning options and the complexities that may be involved in your situation.
We know that the process can seem daunting or even overwhelming, especially given that most people don’t like to think about their own mortality. But estate planning is crucial if you want to protect your assets and your loved ones. So, with that in mind, don’t put estate planning off any longer. Instead, consider reaching out to an attorney who you trust to competently navigate you through the process.