Many people have heard that there may be significant financial, tax-related, legal and estate-related advantages to creating a trust. Yet, not everyone has taken the step
Before you start working with a legal professional to create a trust, you’ll want to communicate your needs, priorities and ultimate goals for that trust. There are many kinds of trusts available to you, and they can be structured in a variety of ways to better meet your aims. Therefore, you and your attorney will need to do some strategizing before you commit to a particular approach.
Which type of trust do I need?
The first two questions you’ll need to ask yourself are:
- Do I want a revocable or irrevocable trust?
- Do I want a living trust or a testamentary trust?
A revocable trust can be modified – and even canceled – at your discretion. By contrast, control over an irrevocable trust will be taken out of your hands as soon as you establish it.
A living trust is created and may take effect – to one degree or another – during your lifetime, whereas a testamentary trust will only go into effect upon your death.
Some trust arrangements and structures are better suited to meet specific goals than others. This is one of the reasons why it is so important to explore your legal options with the assistance of an experienced legal professional before committing to a plan of action.
Regardless of whether you want to fund a grandchild’s college tuition or you want to avoid estate taxes, creating a trust may help you to realize many different goals. You just need to be savvy about the ways in which you approach its creation to better ensure its intended outcome.