Most people are intimidated by the words “trust” or “trust fund.” It is often assumed that only people “with lots of money” need to utilize the legal entity known as a trust. In reality, there are several types of trusts and most can be used as part of an overall estate plan for many people at all income levels.
A trust must contain specific provisions in order to be legally enforceable. Therefore it is imperative that you work with a professional and experienced estate planning attorney in order to set up a valid trust. After carefully discussing your goals withyour estate-planning attorney you will determine what type of trust is right for you. The following are a short list of some of the types of trust your attorney may recommend for you:
1.Revocable trust – a trust that may be modified or amended during the maker’s lifetime.
2.Irrevocable trust – a trust that may not be modified or amended by the maker without permission from each beneficiary.
3.Living trust – a trust that acts as a Will substitute. Your assets are placed in the trust, administered for your benefit while you are alive and then transferred to your beneficiaries upon your death.
4.Special Needs trusts – a trust that allows someone who is eligible for public benefit programs (such as Medicaid and SSI) to remain eligible while also benefitting from another, separate fund
5.Charitable trusts– a type of irrevocable trust that allows you to donate to charity with considerable tax advantages