To take care of your loved one after your death, you want to establish a trust. While learning about the estate planning document, you discover you have several options.
CNN Money breaks down different trust types. Understand your options, so you know how to make well-informed decisions regarding your estate.
Irrevocable and revocable trusts
You lose ownership of assets placed in an irrevocable trust. Without your named beneficiary’s consent, you cannot change the trust. One advantage of irrevocable trusts is when assets appreciate in the trust, you do not pay estate taxes on them.
If you prefer to protect your ownership of assets, consider placing them in a revocable trust. The trust type permits you to change or reject its terms.
Maybe you would rather not leave assets to your adult children. A generation-skipping trust lets you transfer tax-free money to heirs at least two generations your junior, such as grandchildren.
Credit shelter trusts
A credit shelter trust lets you create a will that passes on money up to but not surpassing the current estate-tax exemption. Afterward, you leave the rest of your estate to your spouse without incurring taxes. One advantage of credit shelter trusts is after you funnel funds into the trust, you need not worry about the estate tax, not even if the money’s value increases.
Qualified personal residence trusts
You remove your primary home’s or vacation home’s value from your estate with a qualified personal residence trust. The trust may prove beneficial if you expect your home’s value to increase.
Make well-informed estate planning decisions by getting the facts. The right trust gives you and your loved one’s peace of mind.