Estate planning is crucial in securing your family’s future and managing your assets. More importantly, it involves more than just a will. Trusts are another core component of estate planning. They play a key role in managing your assets and providing your loved ones with financial support.
Special types of trusts can offer unique benefits tailored to specific situations while adding a layer of protection for your loved ones and your estate.
Spendthrift trust
A spendthrift trust helps protect beneficiaries from themselves. This type of trust restricts the beneficiary’s access to the principal. It allows you to appoint a trustee to manage the funds, releasing them in a controlled manner.
Spendthrift trusts are particularly useful for beneficiaries who struggle with financial management or have a history of excessive spending. This trust can prevent creditors from accessing the beneficiary’s inheritance as well.
Special needs trust
A special needs trust allows you to set aside funds for the care and well-being of a loved one with physical or mental disabilities. Federal and state assistance programs generally have eligibility income caps. If you have a loved one with special needs, this trust ensures they receive financial support without jeopardizing their eligibility for government benefits.
Pet trusts
While you may leave your pets to friends or family in your will, this often doesn’t account for the expenses that come with caring for a pet. A pet trust allows you to:
- Designate a caretaker for your pet
- Provide funds for food, veterinary care and other expenses
- Outline specific care instructions
Generation-skipping trust
A generation-skipping trust allows you to transfer wealth directly to grandchildren or later descendants. It lets you bypass your children as well as multiple rounds of estate taxes. This trust may also reduce sibling conflict and help ensure an equal distribution to preserve your assets for future generations.
Tailor your estate plan to your needs
Special types of trusts offer targeted solutions to unique problems you may face. These also provide flexibility and greater control over your assets. Understanding your trust options allows you to establish trusts that benefit your loved ones and assets better.
Working with an experienced estate planning attorney can help as well. They can guide you through your decision-making and assist you in making a comprehensive estate plan.