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A trust can fortify your estate plan

On Behalf of | Dec 4, 2023 | Estate Planning, Wills And Trusts |

All the assets you worked hard to accumulate throughout your lifetime make up your estate. Your estate is the legacy you leave behind. Of course, you would like to protect your legacy from creditors and mismanagement. Estate planning can help you do that, but you may need more than just a last will and testament.

One invaluable estate planning tool you can use is a trust. When done correctly, a trust can safeguard your legacy and guarantee a seamless transition of your assets to your heirs. It is a legal arrangement you can structure for specific beneficiaries and customize to meet your needs and goals.

What are the different types of trusts?

Although there are varying types of trusts, they all have three common essential elements: a grantor or settlor, a beneficiary or beneficiaries and a trustee. The settlor is the creator of the trust. Beneficiaries are the people the settlor designates to inherit their trust assets. They appoint a trustee to manage the trust and thus give them total control over the entity.

Fortunately, as a settlor, you can maintain control over your trust assets by establishing a living trust and naming yourself as the trustee. Make sure you do not forget to name a successor trustee.

You also have the option to specify a schedule of when and how your beneficiaries will receive their assets, depending on the trust you create. Each trust plays a specific role in your estate plan. Here are the trusts you can choose from:

  • Revocable living trusts
  • Irrevocable trusts
  • Testamentary trusts
  • Special needs trust
  • Pet Trusts
  • Spendthrift Trusts
  • Charitable Trusts
  • Qualified Terminable Interest Property (QTIP) trusts
  • Generation-skipping trusts

A trust can offer asset protection from your creditors and provide you with tax benefits. Because the trust is a separate entity, it can continue to operate even when you are no longer around. Therefore, choosing the right trust and trustee is so important.