A trust is a legal document included in an estate plan that helps people distribute assets without the estate being taxed, disputed or put through probate.
In a previous post, you can learn about a few common kinds of trusts, including a revocable and irrevocable trust. However, there are many different kinds of trusts. Here are a few more that you could include in your estate plan:
Incentive Trust
If you worry about how your estate will be used after your estate, you could create an incentive trust. An incentive trust can allow you to set a condition that must be met before a beneficiary has access to any trust funds. For example, you could make it clear that a beneficiary has to be enrolled in college or grad school before they access any fund. Some people use incentive trusts to help fund weddings.
Spendthrift Trust
You may worry that a beneficiary is not financially intelligent. Maybe you know that they have issues spending money and building debt. If you still want to help them financially, you may create a spendthrift trust. A spendthrift trust allows you to limit a beneficiary’s access to funds.
Special Needs Trust
A beneficiary may receive supplemental income or health benefits but is limited to the amount of income and assets they can obtain. A special needs trust can help limit a beneficiary’s access to funds and allow them to retain their other benefits.
Dynasty Trust
Assets can be put in a dynasty trust with the expectation that future generations will benefit from the wealth. This can help avoid estate taxes, gift taxes and generation-skipping transfer tax.
Blind Trust
A trust can create issues for business owners, executives and politicians. To avoid this, you could create a blind trust. A blind trust makes a trustee solely responsible for managing the assets, which intends to avoid conflict of interest and helps ensure privacy.
Learning about your options and drafting a trust can be easy when you have legal guidance.