There are many kinds of trusts that you may want to consider as you begin estate planning, but there are a couple that are more commonly used than others. These include:
· Charitable trusts
· Life insurance trusts
· Irrevocable trusts
These trusts have benefits that help you preserve your assets, avoid taxation, protect assets from rapid spending and more. Here’s a little more about each of them.
To start with, if you want to leave a lasting legacy, donating assets to a charity that you believe in is a good step. You can do this with a charitable trust, which allows you to set aside certain assets for specific charities. You can set up either a charitable remainder trust or a charitable lead trust.
The charitable lead trust sets aside assets like mentioned above. The charitable remainder trust gives you an additional opportunity to get income from your assets for a set length of time. After that, any remaining income or assets go to a charity that you’ve chosen.
Life insurance trusts
Life insurance is a great investment, but if you want to keep it out of your estate and protected against getting spent too quickly, you can add it to a trust. A life insurance trust is irrevocable. This trust holds your life insurance proceeds once they pay out. The trust then holds those funds until your beneficiaries meet the qualifications that you set up. For example, if you want them to get a certain amount of money when they marry or buy a home, the trust will pay out at that time.
Irrevocable trusts can come in many forms, and their benefits are vast. Among the most important benefits is that irrevocable trusts allow you to protect your assets against collections in the case of bankruptcy or going into debt.
These are three kinds of trusts. Your attorney can talk to you about other forms or if these are trusts that would benefit your estate in any way. There are many types to consider, and these are just a few that you may want to use to help distribute and protect your assets.