While wills are an important part of all estate plans, trusts are also beneficial. According to CNN Money, living trusts are established while you are still alive. Like wills, they disperse assets to loved ones after you are gone. However, they provide more control over your estate than wills.
Additionally, trusts are not only useful to the very wealthy. One of the following trusts might benefit you during estate planning depending on your unique needs and situation.
With a revocable trust, you are free to change the arrangement at any time you see fit during the course of your life. You still retain control of assets and property within the trust even after it has been created.
Irrevocable trusts cannot be changed after creation, because the trust owns your assets until your death, at which point the beneficiary owns them. The only way to change an irrevocable trust is through beneficiary approval. This type of trust offers tax advantages, since you cannot be taxed on assets and property you do not actually own.
Also known as a generation-skipping trust, dynasty trusts are used to disperse money to heirs two generations removed without being taxed on the inheritance. It is beneficial to people with considerable wealth who would face a hefty tax burden with other estate planning methods.
Qualified terminable interest property trusts
Blended families, meaning those with lots of new marriages and step-children, often face complicated estate planning situations. A qualified terminable interest property trust allows you to provide assets to your spouse from the trust as a form of income. You also designate beneficiaries, who will receive what is left of your assets after your spouse dies.
The creation of trusts is typically complex, so it is best to work with an experienced estate planning attorney. An attorney can help you establish the trust, while also ensuring that it is properly funded with assets and property.