You may be under the impression that trusts are only utilized by rich and wealthy families. This common misconception could not be further from the truth. Nearly every family in Texas can find a trust beneficial in some way. A trust can provide you peace of mind by ensuring that your assets and possessions go to the right people.
Many people choose to create a trust instead of a will to secure their estate because trusts avoid the probate process and maintain privacy in the event of death. If you have ever considered creating a trust, then you are likely aware that there are many different trusts that serve different purposes and have different stipulations. Here are some of the most common types of trusts and why they could be beneficial for you and your family.
Revocable or living trusts
Revocable trusts are living trusts, and you can change or terminate them at any time you wish. A living trust allows you to use the contents of the trust while you are alive and then pass the assets and property in the trust on to your beneficiaries (using a trustee) after your death. Property and assets in revocable trusts can bypass the probate process, which is one of the primary benefits.
Irrevocable trusts
You cannot alter or change irrevocable trusts during your lifetime. Also, with irrevocable trusts, you give up some of the control over the property and assets that you place into the trust. Many people create irrevocable trusts due to tax purposes. You cannot move the contents of an irrevocable trust back into your possession. They pass directly to your beneficiaries when you die so they can avoid hefty estate taxes.
Special needs trusts
With a special needs trust, you can provide for a disabled loved one. Disabled people often receive government benefits like Supplemental Security Income (SSI) or Medicaid. However, an individual can lose these benefits if he or she has too many assets. A special needs trust can enable you to provide supplementary funds for a loved one without causing them to lose their government aid and benefits.
Creating a proper estate plan
Determining what kind of trust you need will depend on your specific situation as well as your goals for the future. A revocable living trust can give you more flexibility while also avoiding probate. Although you can’t modify an irrevocable trust, the assets held within the trust can pass straight to beneficiaries without being subject to estate taxes. There are also many other types of specialized trusts that you could use and benefit from in certain situations. When you are ready to create a trust, you may want to consider meeting with an experienced estate planning attorney who can help you determine what tools you will need to secure your future and legacy.
