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Monday, February 22, 2021

What Are the Different Types of Trusts?

Trusts are often the less recognized and discussed aspect of estate planning. This is unfortunate because trusts can accomplish many things when properly utilized and implemented. A trust can help you avoid the costs and delays of probate. A trust can also have significant tax benefits as well as helping you secure the future you want for your beneficiaries. There are a variety of trusts and each has specific qualities that may be able to help you accomplish some of your important future goals.

What Are the Different Types of Trusts?

There are two overarching categories of trusts. There are irrevocable trusts which cannot be revoked or amended once created. In fact, the only time when an irrevocable trust may be altered or revoked is in the event that all trust beneficiaries agree to it. On the other side of things is the revocable trust. A revocable trust can, as its name suggests, be revoked or amended at any time. While revocable trusts offer the benefit of flexibility, both trust types can offer significant benefits.

Within these overarching trust categories are more specific types of trusts. For instance, a special needs trust must be an irrevocable trust. This is due in no small part to the fact that a beneficiary cannot have any control over trust assets or the distributions made from the trust. You see, a special needs trust is designed to provide financial support to a special needs beneficiary without jeopardizing the receipt of important government benefits. With a special needs trust, you can essentially give money or other financial support to a loved one with special needs without it being included in the eligibility calculation for government benefit programs.

Another type of trust is a charitable trust. A charitable trust is one where the trust grantor, the person who creates the trust, can give money or other bequests to charity. A charitable trust can be a great way to support your favorite charitable organizations while both you and the charitable organization enjoy tax benefits from structuring the gift through the trust.

A testamentary trust is another popular type of trust. A testamentary trust is established by a person’s will upon his or her death. The trust is established and funded upon the death of the grantor. It is a means of removing assets from the taxable estate as well as an effective and efficient way to transfer assets to named beneficiaries. The creator of a testamentary trust also has the ability to limit how and when trust distributions are made to beneficiaries. Conditions can be placed on trust distributions such as distributions can only be made for educational expenses.

Estate Planning Attorney

If you are interested in what a trust can accomplish for you and your loved one, talk to the knowledgeable estate planning team at Monk Law. We can discuss your options as we put a strong estate plan in place that brings you and your loved ones’ peace of mind. Contact Monk Law today.


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