Our guide to differentiate between the many different types of trusts
Are you considering creating a trust, but have trouble choosing between the many different types of trust – or do you know how to differentiate between different trusts? In that case, you are not alone. There are so many different types of trusts out there – simple trusts, living trusts, testamentary trusts and so on – that many people do not even know where to start.
That's why we have put together a guide to different types of trusts, from revocable living trusts that can help your family avoid probate to inter vivo trusts that can help fund a child's college education.
We also contacted Patrick Hicks, Head of Legal at Trust & Will, for some extra tips and insights. Which reminds us: Qualified Haven Term policyholders can enjoy Haven Life Plus, a bonus rider that includes free, recallable life & trust services from Trust & Will – worth about $ 700 that has the potential to save your family both time and money.  With that said, a revocable living trust is not the only type of trust you might want to consider. There are many different types of trusts, and we want to make sure you have the information you need to choose the type of trust that is best for you.
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While there are many different types of trusts, almost all trusts are divided into one of two categories – revocable or irrevocable.
"Revocable trusts are often used in property planning," Hicks explains. A revocable living trust, for example, provides a seamless transfer of assets after your death, and avoids costly probate proceedings. Small business owners often create revocable life trust as part of the business infringement planning process, ensuring that their business can be seamlessly transferred to new owners.
Irrevocable trust, on the other hand, is designed to benefit you and your loved ones while you are still Alive. "Some irrevocable trusts are focused on minimizing taxes – spousal lifetime access trusts, irrevocable life insurance trusts and the like fall into this category," Hicks explains. A good life insurance policy can help you leave a greater legacy to your loved ones and create generational wealth that can continue to benefit your family over time.
"Other foundations have more specific purposes, such as asset protection or qualifying for Medicaid, says Hicks. For example, a special needs foundation helps parents and guardians ensure that a child with special needs will be financially prepared for adulthood while still being eligible for as many federal and state benefits as possible.
Certain types of irrevocable foundations, including a charity. lead trust and charitable rest trust, allows you to minimize taxes while maximizing charity support. If you are interested in giving back to your community, irrevocable trust can be a way to support the types of organizations that help neighborhoods – and people – thrive.
What is the difference between a trust and a will?  If you have already drawn up a will – or if you are considering creating a will in the near future – you may be wondering if you should consider setting up a trust as well. In many cases the answer is yes.
"A trust is the most comprehensive and complete way to help ensure asset protection for your loved ones," Hicks explains. "When you transfer trust assets to your trust, you own everything in your trust while you are still alive. After you are approved, your assets will go directly to the beneficiary you have chosen."
What is the difference between a trust and a will? Although there are many different types of trusts, each with a specific function and purpose, there is really only one basic type of will – and a traditional last will and testament can be limited in scope.
force after your death and allows you to name guardians for your children and pets, decide where your assets should go and specify your final arrangements ", says Hicks. The different types of trusts on the other hand give you the opportunity to clarify how your assets should be managed both during your life and after your death – while avoiding many of the burdens associated with estate registration and property taxes.
One of the largest The benefits of the different types of trusts are how they can help you streamline your property planning. Some people create family trusts or dynasty trusts and give specific instructions on how their assets should be managed and distributed to future generations. Other people create a blind trust or a discretionary trust, which gives a trustee the capacity to manage the trust's assets and determine when it is appropriate to distribute those assets to the listed beneficiary. There are so many different types of trusts that we do not have enough space to list them all – but whether you are considering setting up a QTIP trust, a Totten trust or a spendthrift trust, you have options. How. Can a trust benefit you and your loved ones?
"An important benefit of building trust is that your loved ones will avoid the long and complicated process of probate," says Hicks. "Trust can simplify asset allocations after death and offer a higher degree of integrity." By creating a revocable living trust, you have the ability to not only manage the trust while you live – that is, change the components of the trust over time – but also manage how your assets will be distributed among your beneficiaries after your death.
" A trust gives you precise control over when and how assets will be transferred to your beneficiaries, "explains Hicks.
What are some of the other benefits of a revocable trust and an irrevocable trust? Good trust can translate your wishes into writing – and in most cases into practice. You may want to create an inter vivos fund to help fund a child's education or create a fund for relatives, for example. You may want to create a marital trust that ensures that your surviving spouse can access money and assets tax-free, thanks to the unlimited marriage deduction. You can even set up a trust that clarifies what will happen if you become incapacitated for work during your lifetime. There are many different types of trusts, and each of them has the potential to benefit you and your loved ones.
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Who should consider creating a trust?
Because there are so many different types of trusts, almost everyone should ask themselves if it can benefit them financially to form a trust. That said, there are a few different groups of people who may want to prioritize creating trust:
New parents : "Parents of young children think that trust gives more control over how children inherit than any other mechanism "Hicks explains.
Parents of children with special needs: " Parents of children with special needs can see that some foundations retain the right to state support in a way that would not be possible without trust. "
People who want to avoid estate registration: " Individuals who want to avoid estate registration – especially in states where estate registration is particularly burdensome – should consider making a trust. "
] People who want maintain integrity: “Individuals who want more integrity will benefit from a trust. Estate registration is a public procedure, so wills can be publicly available – but trusts avoid estate registration and remain private. ”
If you fall into any of these categories – or if you simply want to know if any of the different types of trusts can Benefit You and Your Loved Ones – Consider taking the time to research different foundations and see if any of them might be right for your family. If you already know that you want to create a revocable life trust to avoid the expenses associated with probate, consider using Haven Life Plus to explore the types of trust available through Trust & Will.
After all, the time you spend today. can benefit your family for generations to come.
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