Trusts can help estate planners with their estate plan in a variety of different ways. Trusts can be used along with a will or in place of the will based on the needs and wishes of the estate planner but it is important for estate planners to understand how trusts work.
A trust can be created in different ways including in a will or separate from a will. There are different types of trust. The two primary types of trusts are revocable and irrevocable trusts. It is important that trust formalities are followed when setting up a trust including that trust property must be transferred into the trust for a revocable trust to be properly established.
Revocable trusts are created during the lifetime of the estate planner and can be altered, changed, modified or revoked as the name suggests. Revocable trusts are also referred to as living trusts. If the estate planner’s property is held in the trust, the trust property can avoid the probate process. An irrevocable trust is the other type of trust which cannot be altered, changed, modified or revoked after it is created. In addition, there are several different types of trusts including charitable trusts, special needs trusts, spendthrift trusts and tax bypass trusts.
Trusts are a useful estate planning tool that estate planners should be familiar with. Knowing what the different trust types are and how they can compliment and strengthen an estate plan is beneficial information for estate planners to have when establishing their estate plan.