When making an estate plan, many people stop with a will. While wills can help instruct how an estate should be distributed and who should benefit, there are some disadvantages to wills. For example, an estate may be subjected to estate taxes if a will is used. And, beneficiaries often have to wait for probate to end before they inherit any assets, which in some cases can take over a year. Wills are also probated in a public forum (i.e., the court room) with the strangers listening in.
But a will isn’t the only document in an estate plan that can instruct how assets are handled. A trust can keep most or all of an estate entirely out of probate and provide better security for the heirs. Furthermore, different kinds of trusts give grantors unique options.
1. Revocable trusts
Many people make revocable trusts. A revocable trust can be altered at any time so that the grantor may add assets or remove beneficiaries from this trust as circumstances change.
2. Irrevocable trusts
Once the grantor dies, a revocable trust becomes irrevocable and can’t be altered. Grantors can also make irrevocable trusts while they are alive, but they can’t be revoked or altered without the beneficiaries’ consent.
3. Charitable trusts
Instead of giving assets to family and friends, many people give back to their communities. Grantors can make charitable trusts to distribute assets to private organizations or charities.
4. Pet trusts
Assets can also go to pets in a pet trust. These assets typically are only used for the care of a grantor’s pet, such as veterinary bills, food, grooming, and toys.
5. Generation-skipping trusts
Many grantors make trusts for their children, but some people prefer to put assets away for their grandchildren. This can be done with a generation-skipping trust.
In short, there is a trust for whatever you would like to do. If you are making your estate plans, learn more about the options before you decide to settle on just a will. Call attorney Mark Tebelius.