Are There Different Types of Trusts?

Are There Different Types of Trusts?Estate planning is a personalized endeavor. There is no single universal estate plan that can be ideal for everyone. When you are planning your estate, you should explore all of your options and make fully informed decisions that serve your interests.

Some people think that estate planning is a matter of a will or a trust. In fact, there are multiple different types of trusts that can be utilized. The circumstances will dictate the optimal course of action. Let’s look at a few scenarios that can be addressed through the utilization of a trust of some kind.

Benefit Preservation

People with special needs often rely on Medicaid for health insurance, and they can receive income through the Supplemental Security Income program. These programs are only available to people who have very limited financial resources. Eligibility is not necessarily permanent once it has been granted. An improvement in financial status can cause a loss of eligibility.

If you want to provide for a loved one with special needs without impacting benefit eligibility, you could convey assets into a supplemental needs trust. The trustee could use the assets in the trust to make the beneficiary more comfortable, but eligibility for benefits would not be interrupted.

Estate Tax Efficiency

High net worth individuals have to be concerned about the federal estate tax. If you are exposed to this tax, you could convey assets into a wealth preservation trust to gain estate tax efficiency. Grantor retained annuity trusts, generation-skipping trusts, qualified personal residence trusts, and charitable lead trusts are some of the trusts that can be used.

Asset Protection

Lawsuits are not uncommon during our current era. If you are concerned about legal actions, you could convey assets into an asset protection trust.

Probate Avoidance

If you use a will to direct the transfer of your personally held property, it would be admitted to probate after you pass away. The probate court would supervise the administration of the estate.

There are considerable expenses that accumulate during probate, and it is a time-consuming process. The heirs do not receive their inheritances while the estate is being probated by the court, and it will typically take close to a year at minimum.

You could avoid probate if you were to establish a revocable living trust. The trustee that you name in the trust agreement would be empowered to distribute assets to the beneficiaries after your passing outside of probate.

Contact Our Firm

Our firm can help if you would like to develop a custom crafted estate plan that is ideal for you and your family. Register to attend a free Living Trust Seminar on the following page and we will get back in touch with you promptly: Naples FL Estate Planning Attorneys.

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