Trusts are some of the most powerful tools people can include in their estate planning arsenals. When properly drafted, trusts effectively address nearly any concern a person might have regarding their financial assets and family members. These documents offer peace of mind to those who wish to ensure that they leave no loose ends after they die.
You can choose from several types of trusts. Depending upon your circumstances, you may only need a single trust. However, you can add more than one to your estate plan.
Unfortunately, many Arizona residents do not understand how trusts strengthen their estate planning efforts. Let’s look at some basic information on popular types of trusts.
Living trust: Also called a revocable trust, this document can help you manage your assets while you are alive. Because they are revocable, you can modify living trusts at your discretion. This type of trust is effective in helping avoid the probate process and typically reverts to an irrevocable trust upon your death.
Irrevocable trust: As its name implies, once created, no one — not even you — can alter or modify the document. This is useful if you have property or assets that require tight control, even in the wake of your death.
Spendthrift trust: This document prevents beneficiaries from selling or pledging interests out of the trust. People typically choose this option if one or more of their heirs have difficulty managing money and other assets.
The three types of trusts discussed here work well for most people, but it is wise to continue learning about these valuable legal documents. Discussing your life circumstances with an estate planning attorney can aid you in discovering which trust(s) will best meet your needs.