Given their purpose of helping families to plan out the transfer of wealth to loved ones and others, trusts are commonly found in estate plans of all kinds.
There are many different kinds of trusts, which can all serve different purposes. But how do you know which one is right for you and your family’s financial goals?
Keep reading to learn more about some of the most common trusts—and reach out to a Houston estate planning lawyer with The Curry Law Firm for more information.
Revocable and Irrevocable Trusts
Trusts are essentially the rights to money or property that have been safeguarded for the benefit of someone else. Because of this, trusts are often used to create a plan to transfer wealth and property between family members and other interested parties.
Revocable and irrevocable trusts are two of the most common instruments for this purpose. Revocable trusts, also known as living trusts, can be revoked or modified at any time by the living trustmaker. These kinds of trusts are often used for the purpose of avoiding probate.
Irrevocable trusts, on the other hand, cannotbe altered after their creation. Not even the trustmaker can remove a property from an irrevocable trust.
Upon the death of the trustmaker, most revocable trusts become irrevocable trusts.
Charitable trusts are often endowed by families with large estates for the benefit of a charity, non-profit organization, or some other public good. But what is their financial purpose? Generally, it’s to reduce the burden of estate tax on the trustmaker’s inheritors.
These trusts forbid the sale of the beneficiary’s interest in the trust. This mechanism also protects the property therein from creditors. Eventually, the property in the trust is earmarked for return to the beneficiary.
Other types of trusts that could be beneficial to you in certain circumstances include: