Trusts are an important estate planning tool that can survive a variety of different purposes for estate planners. Because of their usefulness, estate planners should understand the different types of trusts and how they can help them.
The most basic description of a trust is that it creates a right in property that is held in a fiduciary relationship by a trustee for the benefit of another party. A trust can be used in conjunction with a will or in place of a will. Additionally, the benefits of a trust can be utilized during life or after death. There are two broad categories of trust and several different types of trusts that can serve different purposes to meet the different needs of estate planners.
Trusts can be revocable or irrevocable and revocable trusts are oftentimes referred to as living trusts. The primary difference is that a revocable trust can be changed once it is created while an irrevocable trust cannot be changed once created. There are specific requirements for a trust to be properly set up that estate planners should be aware of. One in particular is that trust property must be transferred into the trust for it to be considered created. Some examples of different types of trusts include charitable trusts, special needs trusts, spendthrift trusts and several others.
Each different type of trust can serve a different purpose designated as important by the estate planner as part of their overall estate plan. Understanding how trusts can be beneficial in the daily lives of estate planners and as they plan for the future is valuable information to have when estate planners are thinking about what they want their estate plan to look like.