Financial planning is an important reason why many people create an estate plan. There are so many options available for those working to put together the pieces of their estate plan. When you start planning, your attorney may start mentioning the benefits of creating a trust. With so many types of trusts available, it can be challenging to know which one is right for your situation. This is where an estate planning attorney can help immensely. Finding a lawyer familiar with the laws dictating the creation of these powerful legal tools is a great first step. There are many types of trusts, but we’ve compiled a list of the top six that most individuals find beneficial to their financial circumstances.
The 6 Most Common Trusts Found in Estate Plans
You should start by scheduling a meeting with an estate planning attorney who can put together a plan that best fits your unique situation. Commonly, you’ll only need to answer a few questions about your goals and financial situation to get started.
- Bypass Trusts: Estates with high-value assets likely to incur a hefty tax bill upon the death of one of the parties in a marriage can avert or bypass these taxes by placing them in a bypass trust. These trusts are sometimes referred to as credit shelter trusts, and they protect the assets of the surviving spouse.
- Charitable Lead & Remainder Trusts: When leaving money to a charitable organization, there are many routes you can take. Whether lead or remainder, charitable trusts are split-interest trusts where a charity and a designated party share the interest of a trust. The years it pays can be for a defined period or a lifetime. Whether the charity is paid at the beginning or end of the allotted time depends on the type of trust. A lead trust pays at the beginning, and the remainder pays at the end.
- Special Needs Trusts: A trust can be crafted for special needs individuals who require long-term care without exempting them from qualification for any eligible government benefits.
- Marital Trusts: When a partner in a marriage dies, it can create a significant tax burden, but marital trusts provide asset protection to the surviving spouse because the trust assets become part of the deceased spouse’s estate.
- Qualified Terminable Interest Property Trusts: Commonly used when a party marries again but has children who are the beneficiary of the deceased party’s assets. A qualified terminable interest property trust can pay the surviving spouse an income without deeding the assets to them. With the income of the primary breadwinner gone, the trust can provide income for the duration of the surviving party’s life. Upon the death of the surviving party, the assets are then passed on to the true beneficiaries.
- Testamentary Trusts: Testamentary trusts are created after the death of an individual, and they are provisioned in a will to provide for named beneficiaries who have issues that the designator felt precluded the creation of a traditional trust. Often these beneficiaries are either too young, irresponsible, or ill. These trusts are in many ways like a spendthrift trust that protect the assets from creditors and legal actions against the beneficiary.
Providing Creative Estate Planning Solutions
As you can see, there are many options and trusts available to meet any financial or personal situations you may face in the creation of your estate plan. Finding an experienced and knowledgeable estate planning attorney is the first important step you can take towards creating a lasting document of your wishes for your loved ones. Cecil Cianci, PA invites you to call us at for an appointment to learn how we can help you craft an estate plan to protect your family and your assets. Call us at (916) 675-3866 for more information about estate planning.