People often understand the basic idea of using a trust in an estate plan. You put your assets into the trust, you write out instructions on how the trust should operate, and then the assets get used or distributed in accordance with those rules. A trust gives you control over your assets even when you are not around to make those decisions yourself.
While that is essentially how a trust works, don’t assume that all trusts are the same. You need to select the right one for your situation and your family’s needs. You have a lot of different options, including:
- A Totten Trust
- A Tax By-Pass Trust
- An Educational Trust
- A Spendthrift Trust
- A Constructive Trust
- A Special Needs Trust
- A Charitable Trust
- An Asset Protection Trust
- An Irrevocable Trust
- A Revocable Trust
- An Age-Based Trust
These are just a few examples, and they all offer different benefits. For instance, a trust based around age ensures that your heirs are old enough to use the money wisely when they get it. A spendthrift trust protects someone from their own poor financial choices. An educational trust makes sure that at least some of the assets you leave behind go toward college. A special needs trust gives someone financial assistance without making it impossible for them to get government benefits they need.
The key, when creating a trust, is to start by thinking about your goals and what end result you want. Once you understand exactly what you would like the trust to accomplish, then it is time to look into all of the options you have.
