If you want to ensure that your assets are handled the way you want them to be handled, or you want to make sure your relatives can avoid probate court, a trust might be a good option for you. There are a few different types of trusts, but all trusts are just legal documents that specify how property and assets should be managed and who will manage them.
Trust basics
The person making the trust (known as a grantor or trustor) names a person to be responsible for managing the property named in the trust. The person in charge of managing the property is called the trustee. The grantor then names a beneficiary or beneficiaries.
A beneficiary is the party that receives the benefits listed in the trust. A grantor will often name themselves as trustee. This gives then complete control over all of their assets named in the trust. These are the basic roles in a trust, but these are different types of trusts. The basic trusts are,
· Living trusts
· Revocable trusts
· Irrevocable trusts
Living trusts
A living trust is just a trust that is created and implemented while the grantor is still alive. Most assets can be put in a living trust, but some things like retirement savings and life insurance cannot be. This gives the trustee control over their assets.
After the death of the grantor, a living trust allows the property in the trust to be distributed to the beneficiaries without having to go to probate court. Probate court can be a hassle for some families and avoiding it can make things easier in a time of mourning.
Revocable trusts
Revocable trusts are trusts that can be altered by the grantor at any time. This freedom allows them to change beneficiaries or trustees at any point. This flexibility can make property easier to manage.
Irrevocable trust
These are trusts that cannot be changed after they have been created. There are some legal advantages to forming this type of trust, but since they are so committing, it is highly suggested that you work with a legal professional who is familiar with trust law when drafting an irrevocable trust.
Other trusts
There are a few other types of trust as well. Most are specialized to address a specific concern or purpose. They include,
· Spendthrift trusts
· Irrevocable life insurance trusts
· Special needs trusts
Every trust serves a specific purpose. If you have questions regarding trust or are considering creating one there are some online resources, but it is suggested that you seek the services of a legal professional. Preferably one who specializes in trusts and wills. They will be able to offer assistance and expertise and will make the process go as smoothly as possible.