When families in Kansas and Oklahoma start the estate planning process, they often choose to create one or more types of trusts. But why is this? Why would an estate plan need a trust, or several of them? What do trusts do that other estate planning tools do not?
To help explain why your estate plan might rely upon one or more types of trusts, today we are going to take a closer look at the variety of protections and options these estate planning devices afford. However, it’s important to note that there are scores of trusts available today, and our brief discussion of the different types only scratches the surface. If you want to decide what trust might be right for you and your needs, we encourage you to schedule an appointment to visit with us. We are currently scheduling telephone or video conferences as well as in-office appointments.
Different Types of Trusts
One reason there are so many types of trusts is because of the way these devices are categorized. Trusts can be broken up into different groups based on the qualities they share. For example, if you create a living trust, you create a tool that takes effect while you are still alive. On the other hand, if you create a testamentary trust, you create a trust that only takes effect after you die. (These are called testamentary trusts because you create them through your last will and testament, which only becomes effective after you die and a court has accepted it.)
Other trusts have terms that you can change after you create, known as revocable trusts, while an irrevocable trust cannot typically be changed once it has taken effect.
Trusts are not only defined by when you create them or by whether you can change their terms, but also by the kinds of benefits they offer. For example, a revocable living trust is primarily designed to allow your estate to minimize, or avoid, probate requirements. If you use a revocable living trust properly, your estate will be able to pass to your inheritors without first having to go through probate.
On the other hand, a special needs trust has nothing to do with probate avoidance. With a special needs trust, you take some of your property, place it in the trust’s name, and name a family member who has disabilities as the beneficiary. Because the trust owns the property, the beneficiary can still use the property the trust owns without being considered the owner. This will allow the beneficiary to take advantage of any government benefits that might be available to people with special needs without worrying about being excluded because of income or asset restrictions.
For additional information, please join us for an upcoming FREE seminar. If you have questions or concerns about how estate planning may benefit you and your family, contact an experienced estate planning attorney at Parman & Easterday by calling 405-843-6100 or 913-385-9400 to schedule your appointment today.