Types of trusts
12/16/2019 | JMG GROUP
Understanding wills and trusts
Creating a will, revocable trust or irrevocable trust starts by considering your goals and objectives.
A trust can be a valuable tool in your overall wealth plan. Many wealth plans include one or more types of trusts, each of which fulfills a specific need.
It’s important to consult with your attorney and your wealth advisor to determine your intent so together they can ensure that the appropriate provisions are built into your plan.
Whether you are leaving a bequest to a charity, providing income for your spouse, or giving assets to your children or grandchildren, a trust can be an effective way to build your legacy.
Some trusts can be modified after they are created, while others are irrevocable after they are legally established.
Compare wills and trusts
Revocable living trusts
Also known as living trusts, revocable trusts allow you to retain control of your assets during your lifetime. You can change your trust at any time.
How a revocable trust is like a will:
- Both are estate planning documents.
- Each reflects your wishes regarding asset distribution.
- Both concern assets that are included in your taxable estate (for estate and inheritance tax purposes).
How a revocable trust and a will differ:
- A revocable trust allows you to avoid probate—which can be a very public and lengthy process—while a will does not.
- The Trustee of your revocable trust can act for you in case of your incapacity to ensure that your needs are met, and your assets are managed appropriately.
Irrevocable trusts can be created for a wide variety of objectives such as providing financial security for your family as well as supporting charitable causes in your community. Irrevocable trusts generally can’t be changed after they are established, subject to state law requirements.
- Marital deduction trusts
- Qualified terminable interest property trusts (QTIPs)
- Credit shelter trusts
- Special needs trusts
- Domestic asset protection trusts (DAPTs)
- Dynasty trusts
- Grantor retained annuity trusts (GRATs)
- Qualified personal residence trusts (QPRTs)
- Charitable lead trusts