While researching estate planning, you learn of trusts. How do they help distribute your assets, and how should you use them?
CNN Money describes different trust options. Determine which type suits your needs most favorably.
Irrevocable and revocable
When you place assets into an irrevocable trust, you give up possession of them, and you surrender the ability to alter the trust without the beneficiary’s say-so. The advantage is estate taxes do not apply to trust assets that appreciate.
With a revocable trust, you remain in the driver’s seat regarding assets in the trust. You also maintain the right to change or rescind trust terms as you see fit.
Perhaps you have grandchildren or beneficiaries a few generations your junior whom you want to leave assets. A generation-skipping trust lets you provide for younger beneficiaries without worrying about taxes.
Irrevocable life insurance trust
You leave your life insurance policy out of your taxable estate with an irrevocable life insurance trust. The trust lets you take care of your loved ones and cover estate costs. Give careful thought to using this estate planning tool, as you must give up all ownership rights and lose the option to alter beneficiaries or borrow against the policy.
Qualified personal residence trusts
If you expect the value of your primary residence or vacation property to appreciate, you may remove it from your estate with a qualified personal residence trust.
Peace of mind regarding your estate and taking care of your loved ones comes from a solid education on estate planning. Trusts help provide for those closest to you in your absence.