It can be challenging to plan for every change in life. Certain life events are sudden occurrences that may catch you off guard, while others may simply seem difficult to consider, such as death. However, taking measures ahead of time to avoid potentially undesirable consequences might be in your best interests.
Perhaps you already have a will in place, but you may want to set something up that will survive after you are gone. You could consider setting up a trust, and with numerous trust options available to suit your needs, acquiring guidance could help you make informed decisions throughout the process.
Types of trusts and their potential benefits
Assets in a trust may remain in the trust even after your death. You can set up a trustee who will handle these assets, while your chosen beneficiary or beneficiaries will receive the benefits thereof. There are several types of trusts available, some of which may be more common than others, including the following:
- Revocable: In a revocable trust, also known as a living trust, you, as the initial trustee, can make modifications to the trust at your discretion. However, this type of trust might not protect assets from potential creditors and may become an irrevocable trust upon your death.
- Irrevocable: Once an irrevocable trust is formed, you cannot change or modify it in any way, and not even the maker of the trust can remove assets from within. However, since you relinquish your ownership rights to these assets, this may protect them from creditors and potential tax ramifications.
- Charitable: Perhaps you wish to donate a certain amount to charity after your death. A charitable trust could help you achieve this goal while potentially avoiding estate and gift tax.
- Special needs: Perhaps you wish to provide for someone who receives government benefits for a disability, but you do not want to disqualify him or her from obtaining this aid, you might consider setting up a special needs trust to provide him or her with additional benefits.
While these are just a few examples of available options, there are numerous types of trust, each of which may also have varying tax ramifications, and seeking assistance in choosing the correct path might be in your best interests.
Assistance in choosing the correct path
With numerous options to choose from, each of which potentially providing its own advantages and/or disadvantages, you may be feeling somewhat overwhelmed and intimidated. Setting up a trust can be complex, but you do not necessarily have to go through this challenging process alone. By speaking with someone with extensive knowledge in federal and California estate planning laws, you will obtain valuable guidance on the available options and their potential benefits as well as assistance in choosing a trust that is the right fit for you and your beneficiaries.