A will is the most basic document in an estate plan. It helps name beneficiaries and establish who gains from an estate. However, a trust is also susceptible to disputes, taxes and probate. In place, a testator may include a trust in their estate plans.
A trust allows a grantor to give assets to a trustee. The trustee is responsible for distributing assets from the trust to beneficiaries. By doing this, assets may not be subjected to disputes, taxes and probate.
Trusts can have special legal wording depending on what the grantor hopes to achieve. Here are some of the options:
If a grantor fears that their beneficiaries won’t properly use and invest their assets, the grantor may wish to make a spendthrift trust. A spendthrift trust limits how much of a trust a beneficiary has at their disposal. This can, in theory, prevent a beneficiary from spending all of their assets gambling or drugs.
Assets can be added to a trust for the benefit of a pet. Assets in a pet trust may be used to help care for a pet’s needs after the grantor passes away. Whoever is named as the pet’s guardian in the trust can use the assets to buy the pet food, clothing, toys and medicine and pay for vet bills.
A grantor may put aside assets in a generation-skipping trust for the benefit of grand or great-grandchildren. When assets are put into a generation-skipping trust, there may be less taxes.
Assets put into a charitable trust can be dispersed regularly or at a percentage of the value of a trust for a private organization, charity or research program.
Finding the right trust can make a grantor feel at ease knowing their assets are being used for the right reason. If you’re interested in this option, you may need to reach out for legal help to learn what kind of trust best suits your needs.