Estate Planning is the process of working with an attorney to create a legally binding plan for what will happen to your remaining property and belongings (known as your estate) and any remaining money (known as your assets) after you pass away. If someone dies without making an Estate Plan, their estate passes into probate court and the state they lived in makes those decisions for them.
People tend to immediately think of Wills when you mention Estate Planning, but there is another option that is just as popular: Trusts. Trusts allow you to take some or all of your estate and/or assets and place them into a fund that is managed by you, as the Trustee, or a third party. You choose who you want the contents to be passed along to after you die.
You can exert as much control over the trust property as you wish during your lifetime as Trustee, or you can turn over total control to a third party. How much control you retain or relinquish is completely up to you and your comfort level.
Trusts are popular because assets contained within them do not enter probate. Furthermore, they are sometimes exempt from taxes, since they are no longer owned by you as an individual, but are owned by the Trust. You can add a property to them continually while you are alive if you wish, rather than just transferring what was left at the time of your death (like a Will.) Here are just a few of the many different types of Trusts you might want to consider investing in:
A Revocable Trust, sometimes referred to as a Living Trust, is the most basic type of Trust. While you are alive, you have the ability to change the intended beneficiary or add/remove any assets placed in a Revocable Trust.
An Irrevocable Trust is a standard, all-purpose Trust that you cannot make alterations to. Once it is created, you cannot change the intended beneficiary or remove any assets (even though you are still alive and you created it.) For large estates, Irrevocable Trusts can have major tax benefits.
A Charitable Trust is granted to a charitable organization at the time of your death, rather than an individual. Charitable Trusts normally come with their own unique tax benefits. If you’re lucky, the organization might name something after you too.
Special Needs Trust
A Special Needs Trust is created to ensure that a loved one with special needs will be financially protected if anything should happen to their parent or guardian, who is typically the person creating the Trust for them.
Tax Bypass Trust
A Tax Bypass Trust is created for one spouse to leave money to another if they were to die before them. It is so named because it’s purpose is to avoid the assets contained within being depleted by probate or tax laws.
Get Started Today
These five options are just an introduction. There are dozens of different types of Trusts, all with their own unique purposes, that might be right for you. To find the best Trust for you and get started, contact Pence Law Firm, P.C. today! We offer professional guidance for probate and estate issues.