As we grow older, we look for ways that we can take care of our families after we are gone to make sure that they are able to have a worry-free existence. There are many ways that you can approach this topic, but there are distinct advantages and disadvantages to each of the choices that you make. When you are looking into what you leave behind to your loved ones, most individuals default to the idea of a will. While a will is not necessarily a bad idea, it does have distinct disadvantages over something like a trust. Whereas a trust will allow you to leave your estate behind to your loved ones without much intervention on the federal level, the use of a will often winds up costing your loved ones money in terms of taxes or loss of potential government benefits. For the sake of this article, we will assume that you have decided to do a trust rather than a will. That being said, this article covers the different types of trust that you can get to ensure that your family will be taken care of when you are gone.
There are a few different types of trusts that we will discuss in this article. The first is what is known as an estate trust. An estate trust will allow you to leave behind your belongings and finances to your loved ones when you have passed. Unlike a will, however, the estate trust will let you have conditions on how your assets are distributed, lower estate taxes, avoid tax penalties and give your loved ones your assets without the need for a court intervention. When you use this type of trust, it allows what is known as a trustee to deal with your assets for your loved ones. This trustee will help distribute your assets accordingly to your loved ones who are also referred to as the beneficiaries.
The estate trust applies to conditions of your assets once you have passed away, but the living trust operates a little bit differently. The living trust operates similarly to a will and an estate trust but differs in the sense that you are the trustee of your estate rather than a third party. You have control over your assets while still living and they transfer to your beneficiaries that are named in your trust, again bypassing the need for a probate court. One advantage to the living trust is that it makes the handling of your assets easier once you have passed due to the process being simplified while you are still living and in charge of the estate.
There is a very particular type of trust that is known as a special-needs estate trust. It is useful to know about this particular type of trust because it is something that many people are not aware of when planning for their absence. When utilizing this particular type of trust, special needs estate planning services are offered to allow loved ones who may have special needs to be beneficiaries of your estate while a trustee oversees your assets and distributes them to your special needs loved one accordingly. Special needs estate services will often allow your special needs loved one to still have access to government benefits and possible disability payments while still having access to your estate. In many cases, a will can cause a loved one to appear to have a higher income than is reality. As a result, they are then barred from specialist assistance programs and disability.
We all want to make sure that our families are taken care of after we have passed away. It can be complicated to know what the right thing to do may be but a little bit of knowledge will help you make the best decision for your family’s future. Decide what your individual needs are and determine whether a will or a trust is right for you. If you have decided to utilize the estate, will you use a living trust or just an estate trust? Will you enlist the aid of special needs estate services to take care of your family member that may have special needs? Just a little bit of simple education can help us make the right decisions in these circumstances.