When people are developing an estate plan, one common option that will likely be explored is setting up a trust. Depending on your goals for how you want your assets distributed after you are gone, a trust may be an effective solution. However, there are many different types of trusts that can serve different purposes.
Before a trust is set up, there are a number of factors that must often be considered. How much money is involved? Are there properties that should be considered? How old is a beneficiary, and does that affect the type of trust that is set up for him or her? Is avoiding taxes a goal of the trust? Depending on the answers to these questions, one or more of these trusts may be an appropriate option.
Many people who are setting up a trust have considered or will likely consider a revocable living trust. Depending on how this type of trust is set up, it is often a way to avoid probate and make it easier for a person to maintain control over their assets in these trusts until he or she passes away. This is generally considered to be the trust used most commonly.
However, if protecting assets in the long-term is a top priority for a person, it may be necessary to consider a trust that includes stipulations to protect these assets from being taken away from a beneficiary in an event such as divorce.
If a beneficiary is very young or has special needs, a trust may be set up in such a way that limits access to the money. Whether this means regulating the funds that are available at any given time or holding on to it until a person reaches a certain age or life event, a trust set up this way can address concerns with a beneficiary’s capability to manage these assets.
Other types of trusts can reflect a person’s wishes to contribute to charitable organizations, avoid taxes or care for a surviving spouse. There are many ways to address these and other issues by setting up a trust. With the help of a California estate planning attorney, a person can make sure his or her goals are met and concerns are addressed by setting up an appropriate trust as part of an estate plan.
Source: Post Crescent, “Do you need a trust? It depends on your estate planning goals,” Nov. 2, 2013