When it comes to estate planning, whether in Rochester or other areas of New York, the legal jargon can cause confusion. For example, when people hear the term legal trust, it sounds simple, but when they learn that there are many different types of legal trusts, they may feel overwhelmed. This feeling of confusion can prevent people from completing their estate planning, unfortunately. In the interests of helping people get a better grasp on what a trust really is, here are some of most common types of trusts and what they mean.
— Irrevocable trust: This kind of trust cannot be changed once it is created. This might be a good idea for specific properties, which the trust-maker wants handled a particular way, but it can have a negative impact on survivors if overused.
— Revocable trusts: Also known as a living trust, a revocable trust can be changed as needed during the trust-maker’s life. These trusts are useful in avoiding probate once the trust-maker has passed away, but they cannot provide 100 percent protection from creditors.
— Asset protection trust: Just as it sounds, this trust works to help prevent assets from being seized by creditors.
— Special needs trust: While the legal aspects of this trust can be complex, it essentially protects a person with special needs who is receiving government benefits.
— Charitable trust: This estate planning tool ensures a designated charity or charities will receive a portion of the trust-maker’s estate.
These are just a few of the legal trusts New York residents can choose from to disburse their assets upon death. The best way to make sure legal trusts are airtight and within the law is to work side-by-side with an estate planning attorney during their creation.
Source: FindLaw, “Types of Trusts” Nov. 03, 2014