It is not uncommon for people to talk to an estate planning attorney because they have questions about trusts. How do you create a trust? What does the trust do? What is a trust fund? How can you use a trust to protect yourself, your family, or other interest you might have?
While each of these questions is important, today we are going to focus on the question of why there are so many trusts available. We have discussed various aspects surrounding trusts in depth in many previous blogs, but today, we want to focus on this specific question because it can often clear up a lot of other questions that many people have about these essential estate planning tools.
So Many Trusts
A trust is a kind of legal entity, or relationship between certain people in certain property. Because the trust is not really a person, but a legal creation, it has abilities that you, as an individual, usually don’t have. Because of a trust’s rather unique ability to create these kinds of protections, a variety of professionals have developed a wide array of trusts. Each of these trusts provide specific benefits. This is why there are so many trusts, because each of them is designed with a specific purpose in mind.
Not all trusts are equal.
Another important issue to keep in mind when talking about trusts is that not all trusts do the same things. Some trusts afford a very different type of protection or options, while others have very different properties. So, while one trust might allow you to, for example, reduce the effect that probate has on your estate, another trust might allow you to reduce any potential tax liabilities you or your estate might face.
Trusts need to be created with your goals in mind.
Because there are so many types of trust available, it’s almost impossible for the average person to truly know what kind of trust is best suited for his or her needs. For example, you might first speak to an estate planning attorney having no intention of creating any kind of trust because you don’t believe you need one. But, after speaking to your attorney about your long-term goals, current situation, and the kinds of protections you want to provide for yourself and your family, you might choose to create an estate plan that relies on one trust or several different types of trusts.
As we mentioned earlier, the types of benefits provided by different types of trusts is truly remarkable. In the end, understanding why there are so many types of trusts is not so important as understanding what kinds of trusts might benefit you, and what you need to do to secure those benefits. To make this determination you’ll need to speak to your estate planning attorney.