Something you’ve heard about in the past and are interested in creating is a living trust. A living trust is an excellent way to pass on your investments, assets and property after you die and is sometimes used in addition to or in place of a final will.
With living trusts, there are a few different designs that might work for your estate. There are:
- Irrevocable life insurance trusts
- Special needs trusts
- Spendthrift trusts
- Irrevocable trusts
- Revocable trusts
Each of these has its own purposes. For example, an irrevocable life insurance trust is designed to hold your life insurance policy when you pass away. Since that money goes into a trust directly, it may not be counted for the purpose of estate taxes, saving your estate money if you may have owed.
Similarly, a spendthrift trust might be a good idea if you have a beneficiary who isn’t particularly good with money. The spendthrift trust allows you to appoint a trustee who has discretion over the assets. They’ll dole out the funds under the appropriate conditions so that your beneficiaries don’t blow through an inheritance right away.
No matter what kind of trust you end up using, you’ll need to establish a trustee. In a revocable trust, you’re always in charge. For irrevocable trusts, you’ll need to choose a trustee who will manage the investments well, be able to deal with your beneficiaries and understand the legal requirements that apply to a trust in your estate plan. Our website has more on this topic and what to do if you are trying to decide on the creation of a trust.