When it comes to estate planning, there are many questions to answer. For example: Is a trust the right decision for you and your family? If you decide in favor of a trust, this legal document will bring many benefits into your life. But there is one thing you need to remember before you move forward: There is more than one type of trust.
Some of the most common forms of trusts include:
-- Revocable trust. This is created during your lifetime and can be changed or revoked as you see fit.
-- Irrevocable trust. As the name suggests, this type of trust cannot be changed or revoked after it is created.
-- Asset protection trust. With this, you can help protect assets against claims of future creditors.
-- Charitable trust. You can setup this type of trust to benefit a particular charity upon your death.
-- Special needs trust. This is typically setup for a person who receives government benefits. By doing so, the person does not have to worry about his or her benefits being revoked.
As you compare the many types of trusts, it's important to understand how this fits in with the rest of your estate plan. You should also write down a list of pros and cons associated with each type, as this will help you make a more informed decision.
The only way to know for sure if a trust is the right answer is to learn more about the benefits, and then consider how it can be part of your overall estate plan.
Source: FindLaw, "Types of Trusts," accessed May 17, 2016