How to Choose Which Trust Is Right for Your Estate By
Timothy P Murphy
One, or more, trusts are often included to provide more control
and clarification to an estate plan. If you are considering the
inclusion of a trust in your estate plan, deciding which type of trust
to use can be complicated. Although only a thorough consultation with an
experienced and qualifiee estate planning attorney can finalize your
trust choice, there are a number of questions that you should ask
yourself prior to consulting with your attorney.
• When do you want the trust to take effect? A testamentary trust does not take effect until you die, while an inter vivos trust, or living trust, takes effect upon creation by the trustor or after a triggering event during the lifetime of the trustor in some cases.
• How much control do you want over the trust? This is a fairly simple question, but an important one. All trusts offer a certain degree of control over assets by virtue of the creation of the trust alone. If, however, you want to be able to change, modify or terminate the trust in the future then you have to create a revocable trust and not an irrevocable trust.
• What is the main purpose of your trust? A trust may serve more than one purpose simultaneously. For example, it can be used for, among other things, tax planning, probate avoidance, and protection of beneficiaries. Having said this, it is a good idea to prioritize your trust purposes as they may not all work well together. Discuss these with your estate planning attorney.
• What assets do you plan to use to fund the trust? There are a variety of assets that can be used to fund a trust; however, some assets work better with certain types of trusts. For example, there are trusts and other planning strategies that have evolved specifically for life insurance proceeds as well as those that work well with real property assets, for example.
• Are you interested in leaving any of the trust assets to charity? There are a number of trusts that are specially designed for charitable giving. You may create a trust that is only used for charitable giving or you may create one that gives the remainder to charity after a fixed period of time.
• Who are your beneficiaries? As with trust assets, almost anyone can be a beneficiary. Certain trusts though have evolved over the years to cater to certain specific beneficiaries. A pet trust, not surprisingly, is created when your pets are the intended beneficiary, for instance. A generation skipping trust, as the name implies, is perfect for leaving your grandchildren assets. Special trusts are also available for disabled persons receiving valuable public benefits, young beneficiaries and even troubled beneficiaries who may be experiencing problems with substance abuse, financial troubles or marital woes.
• When do you want the trust to take effect? A testamentary trust does not take effect until you die, while an inter vivos trust, or living trust, takes effect upon creation by the trustor or after a triggering event during the lifetime of the trustor in some cases.
• How much control do you want over the trust? This is a fairly simple question, but an important one. All trusts offer a certain degree of control over assets by virtue of the creation of the trust alone. If, however, you want to be able to change, modify or terminate the trust in the future then you have to create a revocable trust and not an irrevocable trust.
• What is the main purpose of your trust? A trust may serve more than one purpose simultaneously. For example, it can be used for, among other things, tax planning, probate avoidance, and protection of beneficiaries. Having said this, it is a good idea to prioritize your trust purposes as they may not all work well together. Discuss these with your estate planning attorney.
• What assets do you plan to use to fund the trust? There are a variety of assets that can be used to fund a trust; however, some assets work better with certain types of trusts. For example, there are trusts and other planning strategies that have evolved specifically for life insurance proceeds as well as those that work well with real property assets, for example.
• Are you interested in leaving any of the trust assets to charity? There are a number of trusts that are specially designed for charitable giving. You may create a trust that is only used for charitable giving or you may create one that gives the remainder to charity after a fixed period of time.
• Who are your beneficiaries? As with trust assets, almost anyone can be a beneficiary. Certain trusts though have evolved over the years to cater to certain specific beneficiaries. A pet trust, not surprisingly, is created when your pets are the intended beneficiary, for instance. A generation skipping trust, as the name implies, is perfect for leaving your grandchildren assets. Special trusts are also available for disabled persons receiving valuable public benefits, young beneficiaries and even troubled beneficiaries who may be experiencing problems with substance abuse, financial troubles or marital woes.
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