The Motley Fool recently issued a new article dispelling the myth that trusts are only for wealthy families with walk-in vaults and rivers of gold. The truth is that trusts have become an essential building block in today’s middle-class and working-class estate plans.
Trusts can save everyone money, heartache, hassle, and time — and they can be much more effective than stand-alone wills in truly protecting your family and your assets.
Let’s look at a few of the trust types that Motley highlights as worthy of your attention:
- Revocable Trusts — This is the trust we use most often when creating a comprehensive estate plan for our clients. It affords its creators a great deal of both protection and control. With a revocable trust, you retain complete authority over the trust during your lifetime. You can change (or even terminate) it whenever you wish. The trust can even activate and distribute funds during your lifetime. But once you die, it becomes irrevocable, and its terms are binding on the trustee and the beneficiaries. Some people call this a “living trust,” and it’s a very popular option.
- Testamentary Trusts — These don’t kick in until you pass away. Their terms are usually defined as part of your Last Will and Testament, and they can be funded with assets from your estate. They don’t offer as much control as the revocable trusts, but as Motley points out, with a testamentary trust, there’s less to think about while you’re alive.
- Life Insurance Trusts — If you don’t set one of these up, you run the risk of allowing your life insurance proceeds to be taxed as part of the overall estate. As Motley notes, “used correctly, life insurance trusts can save your heirs from paying tens or even hundreds of thousands of dollars of unnecessary estate tax, depending on the size of your estate holdings.”
- Charitable Trusts — There are many kinds of charitable trusts, each subject to a series of rules, but the general idea is that you can set up a trust that will benefit you during your lifetime and then benefit a charity of your choice after you pass away (with a nice charitable deduction to boot!). If you’re interested, it’s a good idea to contact one of our experienced Middlesex County estate planning attorneys to discuss the specifics.
There are other types of trusts too, and all kinds of reasons for using them. At O’Connell Law LLC, we understand trusts as a critical part of anyone’s overall estate plan, and we’re dedicated to custom-creating a trust that does what it needs to do for you. Call us today to find out more.
