An estate plan typically includes a will. The will can help clarify the testator’s last wishes. It should include a list of assets and people who should benefit from the estate. However, a will is also susceptible to probate, estate taxes and disputes.
To avoid these issues, people can make trusts. A trust is a legal document that allows grantors to place assets in the trust of trustees. The trustees are then responsible for reaching out to beneficiaries and distributing assets as instructed.
One common kind of trust is called a revocable trust. It can be altered or revoked per the grantor’s wishes. When the grantor passes away, the revocable trust becomes irrevocable and can’t be altered without consent from the beneficiary. Alternatively, some people set a trust to be irrevocable from the outset at this can protect the assets from creditors.
Revocable and irrevocable trusts aren’t the only kinds of trust available. Here are three more trusts grantors can make:
1. Pet trust
Many people die and leave behind pets but pets cannot inherit. A grantor can make a pet trust with assets intended for the use of their pets. For example, for the pet’s grooming, vet bills, food, clothing, toys and care.
2. Generation-skipping trust
Many grandparents want to help ensure their grandchildren have a comfortable life. A grantor can make a generation-skipping trust that would skip two or more generations. The assets in this trust could be used for various things, such as higher education, business planning or marriage.
3. Special needs trust
Many people have disabilities or health benefits. If someone on disability or health benefits would gain an inheritance, then they could lose their benefits. Grantors who know this can create special needs trusts that would shield the assets from being included when calculating entitlement to benefits.
When making a trust, people can benefit from learning about their legal rights and options.
