One of the most powerful tools you can include in your estate planning arsenal is a well-drafted trust. With this document, you can enjoy flexibility when leaving assets to your heirs. You can also add more than one trust to your estate plan, allowing you to address your heirs individually if you feel it necessary.
For example, if you have a relative that often overspends, you can set up a spendthrift trust to help them curtail their spending. In another example, you can create a special needs trust to ensure a disabled loved one remains cared for after your death.
What other types of trusts should you consider?
Estate planning and trust laws in California have evolved to maximize financial protection for you and your family. When choosing your trusts, make sure to consider any financial needs your relatives may have in the future. That way, you can make an educated guess about the types of trusts you will need.
We have already mentioned the spendthrift and special needs trusts. Four other popular trusts to consider include:
- Revocable trusts (help your family avoid probate)
- Tax bypass trusts (protect your spouse from estate taxes)
- Charitable trusts (leave assets to your favorite charities)
- Asset protection trusts (protect your assets from creditors)
As you can see, one or more trusts can strengthen your estate plan and provide your loved ones with many financial benefits after you die. We urge you to familiarize yourself with California estate planning laws when considering adding trusts to your plan. Increasing your knowledge ensures that you find the most effective type of trust for your unique situation.