When you create a trust, you are taking a step in making life easier on your loved ones once you pass away. While you are the person who creates the trust, there is also a trustee who is responsible for holding the title to the trust property and administering it to the beneficiary upon your death.
There are many types of trusts, with the two most common forms being:
— Revocable trusts. A revocable trust can be changed, altered, modified, and completely revoked by the trust maker.
— Irrevocable trusts. An irrevocable trust cannot be changed, altered, modified, or revoked after it is created. Once property is transferred into this type of trust, nobody, including the trust maker, has the right to remove it.
Although not as common, there are other types of trusts to consider:
— Asset protection trust
— Charitable trust
— Constructive trust
— Special needs trust
All of these trusts have a particular purpose. For example, a special needs trust is set up for a person who receives benefits from the government. It is used to protect against the disqualification of these benefits.
Creating an estate plan can bring many topics to mind, including a detailed look at the types of trusts. Knowing how each one works, as well as the pros and cons, makes it easier to decide which one, if any, is best for you, your assets, and your loved ones.
As long as you understand your options and how the trust will be administered, it is easier to make an informed planning decision.
Source: FindLaw, “Types of Trusts,” accessed Jan. 12, 2016