Which Type of Trust Is Right for You? | Estate Plan Trusts | Line of ...

If you have decided to explore the possibility that it?s time to set up a trust, your research may leave you overwhelmed with more questions than answers. A wide array of options is available and choosing the best one to meet your needs is essential. Some types of trusts are complex and contain options that can be combined in almost limitless ways. Some are extraordinarily expensive to create and administer. So, what trust is right for you? You may ultimately decide that you don?t need a trust at all. You may, however, decide that a simple revocable trust will meet your needs. What if, after your research, you still don?t know what?s best? Read below for some thoughts to help guide you in this extremely important endeavor:

Serving Your Personal Needs

If you?re merely trying to just take care of yourself, a simple revocable trust will most likely be your best bet for the following reasons:

? You have the option of picking your own trustee.
? Your hand-picked trustee can manage all the trust?s assets should you become incapacitated.
? You decide what powers your trustee may exert. You may give them broad or narrowly-defined powers. You get to decide.

It?s important to remember that if you become incapacitated with no trust in place, the courts will appoint a total stranger known as a manager or conservator to oversee your estate in whatever manner the court thinks is suitable. (see chapter 14 for more information on ways to plan should you become incapacitated)

An option for you to consider is setting up what?s known as a charitable remainder trust. In this trust, you can receive a steady and regular payment from your trust and you can derive tax advantages while you live.

Additionally, if you own your own business, a trust can be part of your business succession plan. If you have this kind of trust in place, you can be assured that your business will transfer to your beneficiaries in the way that you intended. (see chapter 4 for more information about business succession)

Serving Your Family?s Needs

Most trusts are set up to meet your family?s needs and to benefit your heirs. It?s important to spell out your family?s specific needs, and selecting the best trust to meet those needs is essential. The more specific the wording, the more likelihood that your trust will be carried out in the way that you intended.

? Minor and dependent children. You may include specific wording into your trust that allows for your children to receive distributions of assets from the trust. This wording may:

? Set the assets designated for the children under the direction of a responsible adult.
? Delay distributing all or a part of the inheritance until they become adults. Additionally, provisions can be made that specify gifts be made to children periodically until they become adults.
? Oversee the support and education expenses for the children until they become adults. Some trusts provide for all of a child?s expenses until they finish college.

Provisions such as these can be made for your children by way of a revocable living trust even if you have a testamentary trust that is funded when you die.

? Dependents who are disabled. Earlier in this chapter, you read about special needs trusts. Such trusts are useful for those recipients who receive public assistance. These trusts will provide a more comfortable life for those special needs individuals than they probably could afford themselves, and that public assistance simply cannot provide. (for more information on creating a special needs trust, see chapter 5)

? Second Marriages. Many individuals in second marriages wrestle with ways both to provide for a new spouse?s financial security and to protect the children?s inheritance. Sometimes creativity is the key. Some options include:

? Creating an ILIT that bequeaths life insurance payments to the children and leaves the trust to your surviving spouse.
? Using what?s known as a bypass trust and its accompanying A/B variants to provide for your spouse. This way, you can also be assured that your children from your first marriage can receive an inheritance.
? Creating a revocable living trust before you marry to keep these assets separate from the marriage?s assets. Additionally, a prenuptial agreement could be written whereby the spouse renounces any claim to the trust.

Creating a trust that allows your spouse to reap the benefits of the trust?s assets for a specific number of years after which the children would claim the trust. For example, if you think it?s reasonable, you could allow your surviving spouse to live in your house for 10 years after your death. After the ten years, your surviving spouse may have recovered financially and/or remarried, and your children could claim the house.

Shaz has written hundreds of articles online for almost 3 years. Not only does this author specialize in Self Improvement, you can also check out his latest website on Linen Tea Towels which reviews and lists Linen Kitchen Towels for being more durable, easier to maintain and potentially more aesthetically attractive than other alternatives.

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