When you are creating your estate plan – something every adult should do – you will find that there are many different tools and documents at your disposal. One estate-planning document that has been gaining in popularity is a trust. This legal instrument is something in which you may place property and assets so they can be easily managed in one place, before and after your death, by the trustee.
The key individuals involved in a trust are the truster, trustee, and beneficiaries. The trustor is the one who initiates the trust, the trustee is the named personal representative who executes the trust according to the instructions, and beneficiaries are those who receive property and assets that were placed in the trust. In this blog, we will go over some common types of trusts that are used in Alabama.
- Living Trust: This type is created and entered into while you, the trustor, are still alive and have capacity. While you are alive, you still exert control over a living trust and its contents.
- Testamentary Trust: Testamentary trusts go into effect when the trustor passes away. Trustors use this to specify that beneficiaries should not gain access to the property and assets placed in the blog until the trustor’s death.
- Special Needs Trust: This type of trust is used to ensure that beneficiaries with special needs receive the assets and property you intend for them to receive, as well as to help secure public assistance.
- Land Trust: Not to be confused with conservation land trusts, real estate land trusts are used for landowners to place their real property in. In addition to avoiding probate, land trusts also allow individuals to retain some anonymity as landowners.
Revocable vs. Irrevocable Trusts
Many trusts are classified as either revocable or irrevocable. Revocable trusts allow you to continue controlling the property and assets in the trust; this type may also be altered as your financial situation changes. On the other hand, irrevocable trusts are final and take away your control of the property and assets you place in there.
Benefits of Trusts vs. Other Estate-Planning Documents
One of the main selling points of a trust is that, unlike Wills, they allow beneficiaries and loved ones of the decedent to avoid probate court. If a decedent did not leave any estate plan, the survivors usually must spend a considerable amount of time in the court system settling the estate. Even Wills must pass through probate to some degree. This avoidance of probate is likely to accelerate distribution of inheritances and other benefits to your loved ones. Additionally, trusts are often used to reduce certain tax burdens.
Ready to Start Planning Your Estate?This blog named just a few of the many types of trusts that you may use in creating an estate plan. Many DIY online services claim to make estate planning easy and simple, but there are countless pitfalls to using these services. The best way to make sure your estate plan achieves your goals is to speak with a qualified estate-planning attorney like Tanika L. Finney. Please reach out to our firm today through our website or call us at 334-203-7164 to get started!