As you create an estate plan, you may soon come to the conclusion that a trust is the right decision for you, your family, and your finances.
Of course, you can't move in this direction until you answer one very important question: What type of trust is best?
There are many types of trusts to consider, with the following among the most common:
-- Revocable trusts. A top choice, this is created during your lifetime and can be altered as often as you wish. Also referred to as a living trust, this allows you to transfer the title of property into the trust, thus avoiding probate.
-- Irrevocable trust. As the name suggests, this type of trust cannot be altered after it's created. Once an asset is transferred into the trust, nobody, including the person who created it, can take it back.
-- Asset protection trust. With this trust, you are able to protect assets from future claims by creditors.
Other trusts to consider include: charitable trust, constructive trust, special needs trust, spendthrift trust, tax by-pass trust, and Totten trust.
With so many types of trusts to choose from, you need to learn more about each one, including the pros and cons, to ensure that you make the right estate planning decision.
Since this will have a big impact on you and your family, you need to move forward with caution. Many people are interested in creating a trust, but some never take action because they don't know what they're doing. Rather than concern yourself with this, improve your knowledge base while also consulting with a legal professional.
Source: FindLaw, "Types of Trusts," accessed Dec. 02, 2016