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Does your estate plan need a trust?

On Behalf of | Nov 23, 2023 | Estate Planning |

People who anticipate their passing may want to try and make it easier on their friends and relatives. An estate plan can help detail how a testator wishes their assets were distributed after their death. The main legal document in an estate plan is a will, which often includes an itemization of assets and beneficiaries.

However, a will is typically subjected to probate and estate taxes. An unhappy heir or beneficiary could even contest a will. To protect against these issues, a trust could be made. A trust allows a grantor to give assets to a trustee who is responsible for protecting and distributing them when the time comes. 

If you’re making an estate plan, then it could help to learn what kind of trusts you could make:

5 kinds of trusts to make

The most common is a revocable trust. A revocable trust can be altered by the grantor at any time. When the grantor passes away, the trust becomes irrevocable.

There are many kinds of trusts. Here are a few others with special wordage:

  • Pet trust: A grantor may wish to prolong the care of their pets. A pet trust can include assets and instructions on the proper care of the grantor’s pets.
  • Generation-skipping trust: A grantor who has grandchildren could create a generation-skipping trust to help them in the future. This trust skips one generation, which can also help avoid taxes.
  • Charitable trust: If the grantor was part of a community or research program, they could create a charitable trust to continue funding the organization after the grantor’s passing. 
  • Spendthrift trust: Some beneficiaries are not good with money. A spendthrift trust can limit how many assets are distributed to beneficiaries. 
  • Special-needs trust: Similar to a spendthrift trust, a special-needs trust can limit asset disbursement. This is typically done so that beneficiaries can retain their health coverage or supplemental incomes. 

A trust is unique to every estate plan. People making trusts can learn more by reaching out for legal help.