Trusts are a useful estate planning tool for estate planners to be familiar with. Trusts can help estate planners manage their property during life, at death and can also help estate planners avoid the costly and time-consuming probate process.
Trusts can be used alongside a will or in place of a will. In many ways, a trust is a relationship in which the estate planner transfers property into a trust to be managed by a trustee for the benefit of the beneficiary. For a trust to be valid, it is essential for trust property to be transferred into the trust and that the trust is funded.
The categories of trusts
There are two categories of trusts for estate planners to be familiar with. Trusts can be revocable or irrevocable. Revocable trusts are often referred to as living trusts. They can be altered, changed, modified or revoked. Living trusts, or revocable trusts, can help avoid the probate process because if the trust property is transferred into the revocable trust during the estate planner’s lifetime when they pass the assets will not have to go through the probate process. Irrevocable trusts are the other type of trust. They cannot be altered, changed, modified or revoked.
Within the two categories of trusts are different types of trusts to help estate planners achieve their goals for their trust and estate plan. Examples include a special needs trust, spendthrift trust and charitable trusts. Trusts can be beneficial in a variety of different ways which is why estate planners should be familiar with how trusts work and how they can help meet their estate planning needs.