The estate planning process can be daunting for even the most sophisticated planners. Yet, shying away from the process’s intricacies can leave you and your estate susceptible to something less than full protection. You don’t want that.
Instead, you want a holistic estate plan that’s necessary to protect your interests and your vision of the future. But in order to create the estate plan that’s right for you and your set of circumstances, you have to know what legal vehicles you have at your fingertips.
While discussing your situation and your wishes for the future is the best way to learn which estate planning path is right for you, we hope that this post will provide you with some education.
What trusts should you use in your estate plan?
Much of the nuance in your estate plan is going to come from trusts. There are a variety of trust types that you can utilize, but you have to know what they can provide you before you can decide which one or ones are right for you. Let’s look at some of your options here:
- Incentive trust: This type of trust allows you to motivate loved ones to accomplish a certain goal by conditioning the release of trust assets on a specified condition. You can get creative here, so think about what you want to see your beneficiary do to make his or her life more meaningful.
- Spendthrift trust: This type of trust is used to limit a beneficiary’s use of trust assets so that they’re not squandered away. The trustee has discretion on when a spendthrift trust’s assets should be released, and the trust’s assets are shielded from the beneficiary’s creditors.
- Special needs trust: If you have a loved one who has special medical needs, then this type of trust can be helpful. The funds released from this type of trust don’t count as income for purposes of determining Medicaid eligibility, which gives your loved one another layer of protection.
- Living trust: This is a revocable trust that allows you to bypass the probate process while still enjoying your assets while you’re still alive.
- Charitable trust: With this type of trust, you can ensure that a cause that you believe in is well supported even after you’re gone.
- Remainder trust: This type of trust allows you to provide support to one beneficiary for a specified period of them, then transfer any funds remaining in the trust at that point to another named beneficiary. This can be a good way to support a loved one and a charitable cause or to take care of your own children when you’re in a blended family.
- Generation-skipping trust: if you utilize one of these trusts, then you leave assets directly to your grandchildren and, as a result, bypass your own children. This can have tax consequences that may be beneficial to you and your estate.
There are other trust options out there, too. So, as you can see, you have a lot to choose from. And if you want to protect your assets, your loved ones, and your hopes for the future, then you need to choose wisely.
