Adults should ensure they have an estate plan in place so they have a say in what happens when they pass away. There are several things to consider when you’re getting this plan together. One of these is who you’re going to pass your assets along to.
You have the option of designating beneficiaries for your assets in your will; however, trusts are the other option. There are many factors to consider when you’re trying to determine if a trust is the best option to meet your needs.
Types of trusts
Trusts are a legal tool that holds assets until your death. Once you pass away, the trustee over the trust distributes the assets in accordance with your wishes.
When you’re looking at establishing a trust, you’ll have to determine if you need a revocable or an irrevocable trust. The primary difference between these two types is that you retain control of assets in a revocable trust and can change it as you want, but you don’t have control of the assets and can’t change the trust with an irrevocable trust.
Revocable trusts don’t come with all the protections that irrevocable trusts have. This is primarily because you retain control of the assets. One of the primary benefits that you have with an irrevocable trust is that your creditors can’t stake a claim to the assets to satisfy debts or judgments.
Determining the type of trust that’s best for your situation can be challenging. Regardless of the type of trust you use, your beneficiaries will have some measure of privacy since the trust doesn’t have to go through the probate process. Working with someone who’s familiar with these matters may be beneficial while you make this decision.