A will is a legal document that helps designate assets to beneficiaries. However, this document can also face taxes, disputes and delays. People can add trusts into their estate plans to avoid these issues.
A trust allows a grantor to give assets to a trustee who is responsible for distributing assets to beneficiaries. Additionally, grantors can make trusts with special wording to curate their intentions. Here’s what you should know:
Pet trust
Many pets outlive their owners. Owners may consider making a pet trust that can help prolong the care of their pets. A pet trust can help fund a pet’s needs, such as food, grooming, vet bills, medicine and housing.
Spendthrift trust
Some beneficiaries are not good with money, but grantors still wish to leave them something worthwhile. A grantor who fears a beneficiary may blow their inheritance, such as on gambling or addictive substances, instead could make a spendthrift trust. A spendthrift trust can limit how much money is taken out.
Generation-skipping trust
If a grantor wishes to give assets to their grandchildren or great-grandchildren, they may consider making a generation-skipping trust. A generation-skipping trust passes over one generation for the benefit of another younger generation. Furthermore, this kind of trust can benefit anyone who is 37½ years younger than the grantor.
Charitable trust
Many people are part of organizations or support charitable causes. A grantor can create a charitable trust that can disperse assets to private organizations, communities or charities. These assets can be dispersed at a percentage of the value of the estate or in scheduled lump sums.
Special needs trust
Many people gain government-supplied supplemental incomes and health benefits. These programs can be taken away if the person benefiting from them also benefits from a trust. A grantor may wish to make a special needs trust that limits how much the grantor benefits so they continue to stay on their government program.
Planning out a trust may require help from someone experienced in estate planning laws.
