A will is the most basic legal document in an estate plan. It allows a testator to instruct how their assets should be distributed after they pass away. However, this isn’t the only document that can be made in an estate plan that instructs how assets are given to beneficiaries.
A trust is a common legal arrangement that many people use alongside their will. A trust agrees that a trustee holds on to the grantor’s assets. The trustee is then responsible for distributing trust funds after the grantor’s passing as instructed. People make trusts because it can avoid difficulties like probate, estate taxes and disputes that a will might face.
There’s more you should know about trusts:
3 kinds of trusts to consider drafting
There are several kinds of trusts to consider making. Each can have unique legal language to curate a grantor’s wishes. Here are a few trusts that people may draft:
- Charitable trust: Assets in a trust can be held for charities and then passed as per the grantor’s wishes. There are often tax advantages to encourage this.
- Incentive trust: A grantor can set specific parameters that must be met. An incentive trust, for example, may state that the beneficiary can only use trust funds for the use of higher education and supplies. Otherwise, the funds can’t be used.
- Pet trust: A pet may outlive a grantor. The grantor can make a pet trust to fund a pet’s prolonged care, including food, shelter and medical expenses.
As you explore your trust options, it can benefit you to reach out for legal help and learn more about your trust options.