You may want to consider creating a trust if you have a high-asset estate. There are many benefits a trust can offer that a will cannot. For example, the right kind of trust can protect your assets from estate taxes, debt collection and disputes. You can also use a trust to skip the probate process and distribute assets directly to beneficiaries.
There are several different kinds of trusts that might be of benefit, depending upon your needs.
5 types of trusts that could be useful
You can draft a unique trust to accomplish different goals. A few common types of trusts include the following:
- Revocable trust: You can use this trust to distribute assets to beneficiaries. A revocable trust can be altered or revoked at any time.
- Irrevocable trust: This kind of trust typically cannot be altered or revoked once created. A revocable trust becomes irrevocable when you pass away.
- Charitable trust: You can use this trust to distribute funds to a charity. Trust funds can be distributed for several years to support an organization.
- Spendthrift trust: You can use this trust to limit access to trust funds. A spendthrift trust can help limit misuse and prolong the value of the trust.
- Generation-skipping trust: You can use this trust to distribute assets to a later generation. Some people use generation-skipping trusts to create generational wealth by distributing funds to grandchildren or great-grandchildren.
Before drafting a trust, it is important to consider the goals of the legal document. You can obtain professional legal guidance to learn about your options to build an estate plan that is customized to your family’s needs and your goals.