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A guide to common trusts in estate planning

On Behalf of | Feb 9, 2023 | Estate Planning |

Life is uncertain. Even if you plan every single detail of your day, you never know what might happen to you and when it might happen. Thinking ahead and finding a way to protect your hard-earned assets for the benefit of the people you care for in case something happens to you is a good practice. One of the ways you can do this is by entering into a trust agreement.

A trust is an agreement wherein a person, known as a grantor, grants another person, known as the trustee, the right to hold, manage and distribute their properties and assets to a certain extent and for the benefit of the beneficiaries in the trust.

What are your options?

There is no one-size-fits-all when it comes to trusts. The type of trust a grantor chooses depends on their priorities and values. Some of the common types of trusts grantors may consider are the following:

  • Living trust. As the name suggests, this type of trust allows the grantor, while still alive and able, to choose a trustee in the event of death or incapacity. This allows the trustee to manage assets within the agreement’s terms. A living trust may be revocable or irrevocable.
  1. Revocable trust. This type allows the grantor to terminate the trust or modify its terms during their lifetime. While the grantor is still alive, their assets remain in their control.
  2. Irrevocable trust. Contrary to a revocable trust, the grantor can no longer revoke or modify an irrevocable trust. Even during their lifetime, the grantor no longer has control over their assets and has transferred control to the trustee.
  • Testamentary trust. This trust is one that the grantor establishes in their will and only goes into effect after their death. The grantor may change the terms of the trust by amending their will.

Other types of trusts may include special needs trust, which provides continuous support to disabled individuals, pet trusts, which protect beloved pets and charitable trust, which donates a portion of the grantor’s assets to a non-profitable organization.

Setting up your trust will benefit you and your beneficiaries. It will safeguard your properties and assets while ensuring the future of your loved ones.