There are a lot of misconceptions about the estate planning process. Among them is that it’s straightforward, requiring nothing more than a simple will that specifies how your assets will be distributed once you pass away.
Sure, a will can play a pivotal role in your estate plan, but if you truly want to protect your loved ones and your estate, while taking advantage of everything that the estate planning process has to offer, then you might want to consider some of your other estate planning options.
Why you might want to consider using trusts
One of your other estate planning options is the utilization of one or more trusts. These legal vehicles allow you to set assets aside so that they are managed by a trustee for the benefit of your named beneficiaries.
There are a number of trust types that can be used, and each has its own advantage, which gives you the flexibility to create the estate plan that’s right for you. With that in mind, let’s look at some of those trust types so that you can determine if any of them are right for you.
- Incentive trust: This trust allows you to motivate loved ones to meet certain goals, as the release of trust assets is conditioned on the achievement of an identified goal. This could include anything from getting married to having a child, holding a job for a certain period of time, or graduating college.
- Spendthrift trust: If you’re worried about your wealth being squandered away, then you can utilize a spendthrift trust that ensures that assets are incrementally disbursed so as to ensure longevity.
- Discretionary trust: The purpose behind this trust is similar to a discretionary trust, except here the trustee has discretion over when to release trust assets to your beneficiary.
- Special needs trust. This trust can help a loved one with special medical needs, as it can provide them with financial support without negatively impacting their ability to qualify for government programs like Medicaid.
- Charitable trust: If you want to support a charitable endeavor, then you can do so through one of these trusts. This can help provide long-term financial resources to ensure that those matters that are important to you continue to be addressed for years to come.
- Remainder trust: This trust allows you to keep control of assets for a longer period of time, as you can specify who will inherit them after the initial beneficiary passes away. This can be especially helpful in a blended family where you want to support your spouse but also your children from another relationship.
- Pet trust: You can even create a trust to ensure that your beloved pet is taken care of once you are gone. Here, you can set money aside so that whoever is tasked with taking care of your pet in the years to come will have the financial resources necessary to care for the pet in accordance with your wishes.
Developing the comprehensive estate plan that you want
As you can see, there are a lot of options at your disposal when it comes to estate planning. With so much at your fingertips, you have the ability to create the custom-tailored estate plan that’s right for you and your family.