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Overview of different types of trusts

On Behalf of | May 11, 2023 | Trust |

For some people, creating a trust might be a better way for them to accomplish their estate goals than simply writing a basic will. Trusts can be used to accomplish a broad variety of different purposes, including the avoidance of South Carolina probate, minimizing federal estate taxes, protecting beneficiaries from creditors, and planning for end-of-life care.

What is a trust?

A trust is a legal tool that can be used to hold your assets and pass them to your intended heirs outside of the probate process. This allows for faster distribution of your assets and avoids a public process since a trust won’t be a matter of public record. Setting up a trust and funding it can ensure your assets are passed to the people and entities of your choosing outside of the public’s eye. Trusts are administered by a trustee, which can be you while you remain alive and a named successor after your death.

Types of trusts

Trusts are accounts that hold ownership of assets and can be revocable or irrevocable. Revocable trusts are funds that can be revoked by the grantor while they remain alive while irrevocable trusts can’t be changed once created. Some examples of the types of trusts that might be created include the following:

  • Special needs trust – A trust fund that can be established to provide for a special needs child without interfering with their ability to receive government benefits
  • Spendthrift trust – A trust that protects a beneficiary who has poor spending habits
  • Charitable trust – A trust that benefits a charitable organization
  • Dynasty trust – A trust that is designed to pass on generational wealth while avoiding taxes

These are only a few examples of the various types of trusts that might be created. Establishing one might allow you to protect your family and ensure your goals are achieved.