I often advise my clients to have a trust. It’s a valuable legal document for many reasons. Today I want to provide some information regarding the various types of trust available. This is not an exhaustive list; I’m only hitting the highlights to give you a sense of when each may be appropriate. In addition to illustrating the differences, it also shows the importance of working with an experienced estate planning attorney who can guide you to the one best for your unique situation. There is no such thing as a “cookie-cutter” trust – please don’t allow anyone to tell you otherwise. The following are four common types of trusts:
Revocable Living Trust: This trust allows you to maintain control over your assets during your lifetime and provides for a smooth transition of those assets upon your death, avoiding probate. It can be changed or revoked as long as you’re alive and mentally competent. It can be beneficial if you become incapacitated and need someone to step in on your behalf until you are well again.
Irrevocable Living Trust: Unlike a revocable trust, once you create an irrevocable trust, you typically cannot change or revoke it without the beneficiaries’ consent. This type of trust can be used for tax planning, asset protection, and charitable giving. Note this type of trust limits your control once it is in place. Discussing the pros and cons of this kind of trust with your estate planning lawyer before implementing it is extremely important.
Special Needs Trust: If you have a loved one who is disabled, it is essential not just to name them in your will and think you’ve covered it. Your assets could jeopardize their eligibility for government assistance programs when you die. Again, you must discuss the situation in detail with your estate planning attorney; this type of trust is designed to address situations like that.
Charitable Remainder Trust: As the name implies, this trust allows you to donate assets to a charitable organization while retaining an income stream from those assets during your lifetime. After your death, the remaining assets go to the charity. This one can be a perfect solution for your favorite charity.
Of course, as I said, these are just the more common of clients’ trusts. One type addresses real estate ownership; another allows assets to be passed to grandchildren, skipping the generation in between. Every client is unique, and I always ensure their trust is equally so, designed to meet their individual needs and situation. If you are taking the time and effort to create your estate plan, why not do it the best way you can for your loved ones? Call me to discuss how we can customize your trust for your assets and loved ones. You can reach me at 513-399-7526 or visit my website at www.davidlefton.com.