When you draft a trust as part of your estate plan, it allows you to retain more control over what happens to your assets. You get to decide how your money is spent, even after you pass away.
What kinds of trusts are available?
There are numerous different types of trusts that you can use to do this. A few examples include:
- A tax bypass trust
- A spendthrift trust
- Irrevocable and revocable trusts
- A charitable trust
- A special needs trust
- An education trust
No matter what you choose, remember that life is unpredictable. As things happen, will your trust be too rigid to adhere to what you’d actually want?
For example, maybe you set up a charitable trust because all of your heirs were fairly well-off. You left them some money, but they didn’t need all of it, so a large portion went to charity.
But then one of your heirs gets cancer, loses their job and winds up with massive medical bills — one of the leading causes of bankruptcy in the United States. Do you really want that money to go to charity when it’s clear that your heir needs it? Or would you prefer to use it to improve their life?
Creating the right trust
When trying to create a trust that works for your family, the key is to know about all of the different options you have, to consider what goals you really want to achieve and to create a plan that is flexible enough to work no matter what may happen in the future.