Even though you can create an estate plan at any time, not many people want to think about what might happen after they pass away. That is understandable--the last thing anyone wants to think about is dying. However, it is crucial to set up an estate plan to protect the people and assets in your life after you leave it.
One way to do this is through a trust. Trusts allow you to assign specific assets or responsibilities to the individuals in your life, often called beneficiaries in these matters.
A trust for all your needs
Trusts sound very similar to wills by nature, but unlike a will a trust can go into effect whenever you decide.
Trusts also differ from wills in that you can create as many as you wish. The reason you can have various trusts is because they can be very specific. There are a variety of types, including:
- Living trusts: With this type of trust, you can legally transfer ownership of property to any beneficiary.
- Special needs trusts: Once a child with disabilities turns 18, they are a legal adult just like anyone else. However, they may still require specific care. You can establish a trust to continue caring for your child.
- Asset protection trusts: Generally meant to protect you from creditors, these trusts are also particularly helpful in divorces.
- Charitable trusts: You can set aside a specific amount of money for your favorite charities or causes.
- Pet trusts: Yes, even your pets can benefit from a trust. It is becoming more popular nowadays to designate someone to care for your furry friends if you are no longer able to do so yourself.
There are many more kinds of trusts to choose from, and each one involves a different process as well, including documenting your assets, deciding who will receive what, and drafting the trust itself.
The advantages of trusts
When it comes to your family, you want to continue caring for them in any way you can. In the long run, a trust could:
- Involve less paperwork
- Reduce conflict in your family
- Help avoid taxes or estate fees
- Protect your wishes and legacy
To be effective, it is important to craft a trust properly. No matter the route you decide to take, setting up an estate plan is an important step to protect both you and your family.