As any California resident can attest, it is important to have an estate plan in place. Now, more than ever, it is essential to consider what will occur if one passes on or is deemed incapacitated, as it feels like it is something that can no longer be overlooked no matter one’s age. While putting a will in place can help ensure one’s assets pass on to the person of their choosing, establishing trust can also provide certain levels of security and assurances.
Is a trust right for your estate plan
A will is an excellent tool to ensure one’s property is distributed according to their wishes upon their death; however, a trust has the ability to preserve one’s wealth for the next generation or generations to come. Thus, it is important to consider the role a trust could play in ensuring your overall wishes at the time of and after your death are met.
While large and complex estate benefit the most from a trust, one does not need to be wealthy or own a lot to have a trust. The purpose of a trust is to transfer assets to a third party. Through this transfer, the third party is charged with the responsibility to manage and distribute the assets contained in the trust. Depending on the type of trust, this could occur while one is alive or after he or she passes.
Types of trusts
Depending on one’s overall goals, there are various types of trusts to choose from. Many have heard of revocable and irrevocable trusts. A revocable trust allows for the testator to change, modify and even revoke the trust during their lifetime. In contrast, an irrevocable trust is locked in until the property and assets contained in it is distributed. Another type of trust is a special needs trust. This type of trust is designed to provide and protect assets for a child or other elative with special needs. There is also a charitable trust, which allows one to leave some or all of their estate to a charity.
An estate plan could be considered a constant work in progress. As one’s life changes, it is important to update ones plan. This may mean changing names due to a divorce; however, it could mean adding estate planning documents, such as a trust. Thus, it is important to be aware of the various types of trust one could include in an estate plan and what benefits they could provide.