When determining the kind of trust you need, the choices may be overwhelming. When it comes to the basics, it’s simple – there are two basic kinds of trusts.
- Testamentary Trust: set up by a will and go into effect only after a person dies.
- Living Trust: set up and exist when someone is alive and continue after they pass. Living trusts are most often recommended by Vanguard Legal Group.
Now, let’s look deeper at Living Trusts. There are two kinds of living trusts.
- Revocable: allows the person who owns the trust to maintain control of the assets, the status and terms of the trust.
- Irrevocable: assets are not owned by the person, and no changes can be made to the terms without agreement from the beneficiary.
Going one level deeper will result in a multitude of options. Depending on your personal situation, there are a wide variety of trusts that may fit your needs. Some type of trusts to consider include:
- Charitable Trusts
- Foundation Trusts
- Life Insurance Trusts
- Special Needs Trusts
- Stretch IRA Trusts
It’s important to speak with an attorney and a financial advisor before making a decision because there can be significant estate planning and tax implications depending on what you choose.