When you start to plan your estate, it is likely that you will quickly become overwhelmed with all of the estate planning options available. It can seem near-impossible to figure out what trust or will solution will work best for you, since there are so many different factors to consider.
While it is important that you spend a good amount of time researching your options, we can break down some of the most popular types of trusts, how they work, and what situations they are best suited for.
Revocable trusts are often known as living trusts, and they are characterized by their ability to be changed or revoked completely during the lifetime of the person who set up the trust. They are a great way to avoid the probate process, but they are not necessarily the most effective way to protect the assets of the trust maker.
Irrevocable trusts can never be changed after they are created, therefore they lack the flexibility of living trusts. However, they can be very beneficial for large estates and creating more optimal tax planning strategies.
If you wish to leave some of your assets to a charity or cause, it is possible to set up a charitable trust for these assets. This will help you to avoid estate and gift taxes in the process.
If you are starting to think about planning your estate, it is important that you make yourself aware of all the many options available to you when it comes to wills and trusts before taking action.