Focused On Your Family’s Legacy

3 trusts to consider for your estate plans

On Behalf of | Mar 10, 2023 | Estate Planning

Trusts and trust funds have long been associated with the uber-wealthy, but they’re becoming much more common for people of more modest means – largely because of their versatility.

Trusts are highly effective tools to limit unnecessary estate taxes and retain a family’s privacy. When they’re carefully designed with an eye toward the future, they can also be phenomenal at protecting both the family’s wealth and your heirs. Here are some of the most common trusts that people find to be useful.

Testamentary trusts

Maybe you still have young children at home, and they obviously cannot be left in charge of the assets you leave behind if you die. Or, maybe you have children who are still young adults and you worry that their lack of maturity could cause them to spend through their inheritance too quickly.

A testamentary trust could be the solution. This kind of trust allows you to set terms that will eventually expire. For example, you could create a testamentary trust and appoint your sister as the trustee for your children’s money until they are 25 years of age, at which point they come into their share of the inheritance without restrictions.

Spendthrift trusts

These trusts are designed to protect an heir against their own worst instincts. They’re designed in a way that your heir has no direct access to the funds nor ownership rights. That protects the assets from claims by creditors and angry ex-spouses.

If you have an heir who has a shopping addiction, who gambles or suffers from other vices – or you simply don’t trust their spouse – a spendthrift trust can help you make sure that your hard-earned money stays in the family and isn’t frittered away.

Special needs trusts

These have become increasingly popular as parents seek ways to protect children with autism and other conditions that limit their independence. They’re specifically designed not to interfere with federal or state benefits, such as Supplemental Security Income (SSI) or Medicaid.

The use of this kind of trust can allow you to arrange for your disabled child’s comfort without putting other benefits at risk.

Estate planning is much more than the creation of a simple will. Talking your needs and goals over with someone who has experience in estate planning can help you decide what’s right for you.