Which Type Of Trust Is Best?
After you have created your will, the next step for people with significant assets is typically a trust. This allows you further control of how assets will be handled, particularly over the timeline of their distribution. A trust can also offer tax planning and protection. A trust can be beneficial to those who want to avoid having their estate go through California probate.
There are several types of trusts. Each type has its own value. The type that works for you will depend on your assets and goals.
5 Main Types Of Trusts
A trust can be the best way to preserve and protect assets and is a very common aspect of estate planning for individuals and couples who have invested assets or accumulated wealth. The five most often used trust types are:
- Revocable living trust: Many married couples find this type of trust useful. This type of trust allows you, the maker of the trust (called the grantor or settlor), to have control and access to the assets in the trust while you are alive. You can revoke control of a trustee (the person designated to manage your assets) if needed.
- Irrevocable trust: This type of trust cannot typically be modified while you are alive. It offers protections from creditors that other types may not.
- Special needs trust: If you have a dependent who is not able to manage large amounts of money because of a cognitive disability, chronic illness or addiction, this trust be set up to ensure that the beneficiary (your child or grandchild, typically) will still be able to receive public assistance, Medicare, Medicaid or other Social Security or government type of assistance.
- Charitable trust: This allows you to gift money to the charity or charities of your choice. There are two types of charitable trusts: a charitable lead trust and a charitable remainder trust.
- Irrevocable life insurance trust (ILIT): You can remove your insurance plan from your estate so that the beneficiary (most often a spouse) will not have to pay taxes on the policy payout. You, as the grantor, do not have control over any assets in an ILIT trust, only the trustees do. There is a three-year lookback period for ILITs. This type of trust has protections and can be beneficial to Social Security Disability and Medicaid recipients.
There are other types of trusts available. An experienced California estate planning attorney can guide you through the trust creation process and steps to avoid the cost and delay of California probate. At William H. Sauls, Attorney At Law, founding attorney William Sauls has helped clients with trusts, tax and business law for over three decades. Get all of your questions about California estate planning answered.
Get The Experienced Trust Guidance Your Family Deserves
San Diego attorney William Sauls is well known for his integrity, quality guidance and broad base of California estate planning knowledge. Unlike a large firm with many attorneys, paralegals and assistants, William provides personal service and is dedicated to meeting your unique needs. Call 619-239-8096 or send the firm a confidential get-in-touch email.