Your estate plan can include many different components. One of these is trusts, which are an estate planning tool that enables you to pass assets down to others based on specifications you set. These offer a bit more privacy than just having a will because trusts aren’t handled in probate court.
When you establish a trust, you’ll need to determine the best type for the situation. Discussing your wishes and some specific points about the beneficiaries can help your attorney suggest the ones that will work best.
One consideration that’s present in these cases is whether the trust is irrevocable or revocable. Both options allow you to pass assets to others. The primary difference is that you can’t change an irrevocable trust, but you can change or terminate a revocable one.
Another factor to think about is the purpose of the trust. For example, a special needs trust is a good option for a beneficiary who relies on a needs-based program like Medicaid. The trust is irrevocable and can be used to help cover a loved ones expenses without impacting their eligibility for needs-based programs.
You should also consider the protection from your creditors that these trusts might provide. Your creditors can’t come after an irrevocable trust because you don’t have control over the assets once the trust is funded. They can seek the assets in an irrevocable trust, but they will have to go through the court to do this.
A trust is only one part of your estate plan that should work with the others to ensure that your wishes are carried out. This can help your loved ones as they deal with the impact of your passing since the plan is clearly laid out for them.