A trust is a legal document testators can include in their estate plans. Many people think that trusts and wills are the same thing. But, people make trusts because they can avoid probate, estate taxes and inheritance disputes.
The most common kind of trust is a revocable trust. A revocable trust allows a grantor to place assets in the protection of a trustee. The trustee is then responsible for distributing assets to beneficiaries as instructed by the grantor. The grantor can alter a revocable trust at any time during their life.
Alternatively, people can make irrevocable trusts. Irrevocable trusts can’t be altered or revoked without the consent of the beneficiaries. A revocable trust that’s designed to “carry over,“ however, becomes irrevocable at the time of the grantor’s passing.
Here are several more kinds of trusts that you may need to know:
1. Pet trust
People often worry about the care of their pets if the pets outlive their owners. Grantors can make trusts that are curated for their pets. A pet trust can include assets that are used for the pet’s needs and wants, such as toys, food, grooming and vet appointments. Someone could also be named in a pet trust who is expected to take on the obligations of the pet’s caretaker.
2. Generation-skipping trust
A grantor may have set aside assets for their children. If the grantor’s children have children, then the grantor can place assets in a generation-skipping trust. A generation-skipping trust can be used to grant grandchildren an inheritance that could be used for higher education, to buy a home or to start a business.
3. Charitable trust
Many people wish to give back to their communities after they pass away. Grantors can put assets in a charitable trust that would disperse assets to individual organizations or charities. A charitable trust could make regular payments over a predetermined amount of time.
There are many different kinds of trust for different uses. Anybody interested in creating a trust may benefit by reaching out for legal help to learn about their options.