Many times when thinking of an estate plan, most people think of having a will. A will is great to have, but there may be more benefits to having a trust-based estate plan. A will documents your wishes for the distribution of your assets upon your death. With a trust plan, you have more protections while you are still living. Here are the types of trusts and the benefits to consider when setting up your estate plan.
Revocable Living Trust
A revocable living trust is set up to transfer your assets to the name of the trust, but you are still able to access and manage everything. This type of trust, like a will, still lists your instructions for the distribution of your assets and appoints who you want to handle the process. The main benefit of the trust is that having one avoids the probate process, unlike a will, because your assets are in the name of the trust. This may seem scary, but you are still in full control of everything and can make any changes you like to the trust during your lifetime.
Irrevocable Trust
An irrevocable trust is the opposite of a revocable trust in that changes cannot be made to the terms of the trust once it’s established and the assets you place in the irrevocable trust cannot be taken out as you are legally removing your rights of ownership. This type of trust is typically used for tax planning purposes and may help to shelter those who are vulnerable to lawsuits as the assets in that trust are not technically owned by them, leaving the assets safe from settlements and creditors.
Benefits of a Trust-Based Estate Plan
Aside from avoiding the timely and costly probate process and keeping your financial life private, there are many benefits to having a trust-based estate plan. A trust helps with continued financial support, especially if any of your beneficiaries are minors. This will provide ongoing support for them, without them receiving a lump sum that could have huge tax implications and potentially leave them worse off if they aren’t mature enough to manage their finances responsibly yet. A trust can also give you some peace of mind when it comes to any potential accidents in which you become incapacitated. The person you name to take over the trust after you pass away, would be able to step in and manage the assets and avoid anyone else trying to step in to gain control. With a trust, you are able to plan for every chapter of your life and remain in control of what you’ve worked so hard for.
Not sure what type of estate plan you need? Contact us with questions or to learn how to get started. We offer risk free consultations so we can assess your situation and provide the guidance you need.
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Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is a substitute for, qualified legal advice. Your review or receipt of this article by Lexern Law Offices, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.