One of the most common elements of many estate plans is a Trust. People toss that word around with little regard as to what it is, or how it can work for you! A trust is a legal entity, typically under the control of a small number of individuals. The entity exists not unlike a business who’s sole goal is to maintain assets of the owners. Setting up a trust is incredibly time and labor intensive, but if you want to avoid Probate, it's the only way to go!
There are two types of Trusts, each serving a specific purpose.
An Irrevocable Trust is a common choice for those with complex estate plans. They are rigid and nearly permanent once put in place. Due to its rigidity, it is tax sheltered. If you won't be using those assets, it's a great place to keep your legacy while you still live your life!
A Revocable Trust (sometimes called a Living Trust) is by far the more common of the two. The fact that is revocable means that it can be changed and altered at will (with the help of an attorney). This means that things like the way that assets are divided, the individuals listed as beneficiaries, and what assets are included can all be changed after initial drafting. The problem, is that due to its flexibility, it lacks many of the tax sheltering benefits that an irrevocable trust has.
Trusts are easily one of the most complex aspects of any life plan. Structuring a legacy is always undertaken with the utmost care, and should be done with a trusted attorney. While the difference between the types of trusts are relatively simple, deciding which one (or combination of the two) is always going to be a question for the professionals.
If you think a Trust may be right for you, or are unsure, give us a call (419) 352-7522!