As you sit in your dream home, you can’t help but to feel on top of the world. But you wonder what would happen to all of your assets if you or your spouse were to pass away.
As a general rule of thumb, creating a trust is the best way to protect your assets. Sadly, 67% of people in the United States have no estate plans, which includes trusts.
Fortunately, you don’t have to be a part of that statistic. Before you embark on the trust creation process, though, you need to understand the various types of trusts available to you.
Here’s a rundown on all of your trust options for 2022.
Marital Trust
One type of trust you may benefit from is the marital trust, also known as the “A” trust. You can set up this trust for your spouse’s benefit.
Let’s say that your spouse dies suddenly. Any assets placed in this trust — and any income that these assets generate — will be passed to you. And most importantly, you won’t have to pay any taxes on these assets while you’re alive.
Note, though, that your heirs would have to pay taxes on the trust assets they eventually receive when they pass away.
An estate planning lawyer can assist you in setting up a marital trust that reflects both your and your spouse’s needs.
Charitable Trust
You may also set up a charitable trust if you’re interested in creating a legacy of giving.
For instance, you can earmark specific assets for certain charities through what’s called a charitable lead trust. Then, the remainder of your possessions can go to your chosen beneficiaries upon your death.
Alternatively, you can obtain income from the assets in your trust for a certain amount of time. Then, any remaining income or assets can go to your designated charity. This can be achieved through a charitable lead trust.
Special Needs Trust
Another type of trust you can take advantage of is a special needs trust. This trust allows you to provide assets to a loved one or child with special needs. In this way, your loved one will still receive the extra support they need when you pass away.
The assets placed in a special needs trust can help with covering needs other than clothing, shelter, and food. It also shouldn’t be used for medical care, as Medicaid can help with these costs.
Also, note that the assets you place in this type of trust cannot go directly to your loved one. Instead, they will have to go to third-party service and product providers for the beneficiary to enjoy and use.
A special needs trust attorney can help you to set up this kind of trust properly.
Take Advantage of the Several Types of Trusts This Year
Although wills are often viewed as the centerpieces of individuals’ estate plans, they can easily be contested. Plus, wills have to undergo a long probate process. Trusts, on the other hand, make it easier to pass assets to loved ones.
Consider the above-listed types of trusts as you seek to safeguard your assets in the years ahead. With the right kind of trust, you can make the asset transfer process as quick and painless as possible down the road.
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