While a lot of Estate Planning attention goes to Wills, Trusts are also a very helpful option. A Trust is a fund managed by an independent third-party. You put assets into the Trust and choose who you want it to eventually be passed along to. When you die, the Trust is given to your chosen recipient – immediately, unlike assets placed in a Will, which enter probate before being given to your loved ones.
Last year, we wrote about 5 common types of Trusts that readers might be interested in: Revocable, Irrevocable, Charitable, Special Needs, and Tax By-Pass. Now, we’re taking another deep dive into the wonderful world of Trusts. Here are 5 more types of Trusts that might be right for you:
A Spendthrift Trust is one designed for someone who may not be able to handle the responsibility of receiving the assets enclosed at once. Spendthrift Trusts are great for younger children or financially irresponsible adults. You decide the pace that the Trust unlocks at, so the recipient receives it in regular payments over a set period of time.
A Marital Trust is one that is given from one spouse to another. It passes along assets that the spouse left behind, making the recipient spouse the sole owner of those assets and bypassing estate taxes on them.
Qualified Domestic Trust
A Qualified Domestic Trust is one designed for American citizens to pass along to their foreign citizen spouse. It works to give the standard benefits of marriage to married couples who are not both American citizens. A Qualified Domestic Trust can pass along your assets without getting caught in international confusion or being denied rights over citizenship.
An Insurance Trust is one designed to avoid paying estate taxes on life insurance policies. In this scenario, someone will create an Insurance Trust and name the Trust as the recipient of their life insurance policy, rather than a loved one. When they pass away, the manager of the Insurance Trust will pass along the life insurance benefits without removing estate tax.
A Totten Trust is created at a financial institution. It is, in some ways, a more streamlined and accessible approach to creating a Trust, although there are limitations on what assets you can place into it and how it can be used.
Which is Right For You?Whichever Trust is best for you depends entirely on your circumstances. Plenty of people set up several Trusts all to achieve different purposes. To discuss your Estate Planning options with someone who can help, contact Pence Law Firm, P.C. today! We offer customized, professional, and powerful representation.