By transferring assets into a trust, individuals can protect their wealth and reduce their tax liability. However, trusts can be complex and confusing, and it can be difficult to know where to start. In this guide, we’ll explain the different types of trusts.
Different trusts serve distinct purposes and offer unique features. Here are common examples:
Revocable Living Trust
A revocable living trust allows asset control during your lifetime and seamless management and distribution upon incapacity or death. Offers privacy, probate avoidance, and flexibility in modifying provisions.
Irrevocable Trust
Once an irrevocable trust established, it can't be modified without beneficiaries' consent. Provides potential tax benefits, asset protection, and can be used for charitable purposes or managing assets for future generations.
Testamentary Trust
Created within a will, a testamentary trust becomes effective upon the testator's death. Manages and distributes assets to designated beneficiaries, often protecting assets for minors, individuals with special needs, or controlling distributions over time.
Special Needs Trust
Supports individuals with disabilities without jeopardizing government benefits. Ensures trust assets supplement rather than replace public assistance programs.
Charitable Trust
Charitable trusts enable supporting causes while potentially obtaining tax benefits. Offers ongoing support to charitable organizations or establishes scholarships, grants, or endowments.
Asset Protection Trust
Asset protection trusts shield assets from potential creditors, lawsuits, or financial risks. Commonly used in jurisdictions with favorable laws, providing an extra layer of protection for wealth.
Dynasty Trust
Dynasty trusts preserve wealth for multiple generations by avoiding estate taxes and keeping assets within the family. Provides long-term financial security and establishes a lasting legacy.
Contact Our Trust Lawyers
Consult an experienced trust attorney to determine which trust or combinations of trusts suit your specific estate planning needs and goals.