Estate planning involves utilizing different legal tools to protect your assets. One essential estate planning tool is trusts.
There are numerous types of trusts, and it’s important to establish trusts that meet your precise needs. Here are three of the most common types of trusts.
Revocable living trusts
You may want to retain control over your assets during your lifetime, and a revocable living trust allows this. You can modify or revoke this trust at any time. Upon your death, assets in the trust will be passed on to beneficiaries without going through probate.
Irrevocable trusts
As the name suggests, irrevocable trusts work differently than revocable living trusts. Irrevocable trusts cannot be altered once established. However, there are several advantages to using this type of trust.
An irrevocable trust means that you no longer have control over the assets. This removes the assets from your taxable estate. Further, creditors cannot pursue assets that are safeguarded by an irrevocable trust.
Special needs trusts
If you have a family member with a disability, you may worry about their future should something happen to you. How will they be taken care of financially? How will their medical expenses be paid? Will their government benefits be cut off if you leave them an inheritance?
A special needs trust provides the answer to these questions. You can set it up so that it covers the expenses of your loved one without their government benefits being restricted.
When establishing trusts, it is vital to have accurate information. Seeking legal guidance will help you move forward with an estate planning strategy tailored to your needs.