As you plan out your estate, your main focus is likely your will. You can use your will to instruct how your estate is managed after you pass away. Your will is a good way to help ensure your assets are put to good use. However, your estate could be subjected to disputes, probate and estate taxes if you only have a will.
You could add a trust to your estate plan. A trust works much like a will, but it can help to avoid issues that a will might face. There are several kinds of trust you can add to your estate plan, including:
1. Generation-skipping trust
A generation-skipping trust is used to help create generational wealth. This trust gives assets to beneficiaries who are 37 ½ years younger than the grantor. This can avoid estate taxes and help ensure future generations are cared for.
2. Pet trust
If you have any pets, then you may consider putting aside funds for their continued care in a pet trust. Funds in a pet trust can be used to provide pets with their basic needs (e.g., food, shelter, vet bills and medicine).
3. Incentive trust
You could use an incentive trust to encourage a beneficiary to meet a specific goal if they want to inherit anything. An incentive in this trust could be to have the beneficiary graduate from college and use the fund to pay off tuition fees.
4. Spendthrift trust
A beneficiary may have poor investment impulsiveness. A spendthrift trust could be used to limit how many assets a beneficiary can access so they can still live comfortably. If you are planning on making a trust, then it can behoove you to seek legal guidance.
