According to a poll by AARP, 60% of Americans lack an estate plan. This is a major problem for people who want to leave their estate to their heirs without the exorbitant and time consuming costs of probate proceedings. We suggest you consider not only an estate plan, but one creating a trust for your specific beneficiaries. There are many advantages to creating a trust or will in your estate plan. This article will summarize this for you.
Choosing and Creating a Trust
There are four common trusts people will choose from regarding their estate plan. These are:
- Revocable Trust
This is the type most people prefer when creating a trust. A revocable trust is the most flexible of the choices. You can change, amend, or terminate the trust at any point in time if you so choose. This is useful if you put a large amount of financial assets into a trust and then come up against a life altering event where you need the money. However, it is important to note that these trust become irrevocable upon your passing.
- Irrevocable Trusts
Most people shy away from creating an irrevocable trust because they are extremely difficult to amend or terminate once you put assets into it. However, there are some advantages. For instance, if you are providing an endowment to a charitable foundation, the irrevocable trust may be your best bet. This will separate the assets you put into the irrevocable trust from your estate, which lowers your estate taxes. But, it simultaneously allows you to set parameters for how the assets and money are spent by the recipient charity.
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- Testamentary Trusts
These are trusts that become effective upon your passing. Many times people who wish to leave a specific monetary inheritance for their
grandchildren or minor children will use this type of trust. It is also a useful option for anyone facing a terminal illness that has minor children. You will have the ability to set the rules by which the trust administers. Thus, a minor child could receive a monthly allowance from a trust instead of the entire amount all at once, ensuring a steady stream of income for as long as the trust lasts.
- Intervivos Trusts
The current trend of creating a trust is to establish an intervivos trust. This is a trust that is in place and operating while you are still living. Some advantages include the fact that you may elect yourself as the trustee to administer the trust and that it will protect your assets from certain legal actions. But, you must have a specific purpose for this trust, otherwise it is invalid.
Creating Your Trust
Now that you understand more fully the options of creating a trust, you can begin the paperwork. To begin, you will fill out a trust document. There are some blank, standard forms online, but you may also have a Wagoner County Wills and Trust attorney draw one up for you regarding your specific preferences. This document must include the name of a beneficiary, the name of a trust, a notary stamp and other important provisions regarding the corpus of the trust for it to be valid. After completing this document, you can start transferring assets into your trust.
While the steps appear simple, there are some tedious parts. Don’t let a simple mistake derail your estate plan when you are creating a trust. Our attorneys can review your paperwork and ensure the trust is going to work with your needs and preferences. Call us today for a free consultation.
