Types of Trusts & How They Work
As trusted partners in estate planning and wealth management, we discuss trusts daily with clients. Whether you're considering estate planning for the first time or looking to enhance your existing strategy, understanding the kinds of trusts and how they work is essential.
Understanding Trusts
At its core, a trust is a legal arrangement that allows a trustee to hold assets on behalf of beneficiaries. Trusts offer a versatile tool for estate planning, providing flexibility, privacy, and control over how assets are distributed both during one's lifetime and after one's passing. By establishing a trust, you can ensure that your wishes are carried out, minimize probate costs and delays, and provide for your loved ones tax-efficiently.
Types of Trusts and How They Work
Various types of trusts are available, each serving different purposes and catering to specific needs. Common types of trusts include:
Revocable Living Trust: Allows you to control your assets during your lifetime and designate how they should be distributed upon your passing.
Irrevocable Trust: Provides asset protection and estate tax benefits by transferring ownership of assets to the trust, removing them from your taxable estate.
Charitable Trust: Allows you to support charitable causes while potentially reducing income and estate taxes.
Special Needs Trust: This trust provides ongoing care and support for a loved one with special needs without jeopardizing their eligibility for government benefits.
Asset Protection Trust: Shields assets from creditors and lawsuits, helping to preserve wealth for future generations.
There are numerous benefits to starting a trust as part of your estate planning strategy, including probate avoidance, privacy, control, asset protection, and tax efficiency.
Want to learn more about trusts?
From drafting trust documents to providing ongoing guidance and support, Independent Wealth Solutions is committed to helping you navigate the complexities of trusts and determine what’s best for you. Call us, and we can share more on the trusts that may benefit you the most.
