Do you want to protect your estate from collections, estate taxes and conflicts after you pass away? One of the ways you can protect your legacy is by creating a trust.
A trust is a legal document that allows you to entrust your assets to a trustee. The trustee manages your assets as instructed in your trust, distributing assets to beneficiaries as you designate.
You can create a number of types of trusts for a variety of purposes. Here are a few trust options.
1. Revocable trust
A revocable trust is a common legal document added to estate plans. You can draft, alter and revoke a revocable trust at any time, allowing you to add or remove assets and beneficiaries. When you pass away, a revocable trust becomes irrevocable. An irrevocable trust cannot be easily altered or revoked.
2. Incentive trust
You can use an incentive trust to protect trust funds from collections and misuse. An incentive trust allows you to set conditions that must be met before a trustee distributes assets to beneficiaries. In other words, you can set up an incentive trust to help ensure that a beneficiary is using trust funds responsibly.
An example of how an incentive trust can be used is for higher education. You can create an incentive trust with a clause that limits a beneficiary’s access to funds unless they are enrolled in school. You could also make a clause that only distributes assets based on a beneficiary’s grade point average (GPA).
3. Charitable trust
You could donate your assets to charities, private organizations or research programs with a charitable trust. A charitable trust can distribute assets for the benefit of a charity before or after assets are distributed to other beneficiaries.
Having experienced legal guidance can help you determine which kind of trusts are appropriate for your goals and wishes for your loved ones and for the use of your assets.