Ways to Determine Which Type of Trust is Best for Your Estate

It is not uncommon for people to be overwhelmed by the prospect of estate planning. For example, while many people are aware of the existence of trusts, when faced with the various types of trusts available, they may be confused about which one best suits their needs. There are ways to determine which type of trust is best for your estate, though, to take full advantage of the benefits trusts have to offer. If you need assistance choosing what kind of trust will benefit you the most, it is smart to meet with a capable estate planning attorney to evaluate your options.

Ways to Determine Which Type of Trust is Best for Your Estate

There are numerous factors people should consider when determining what type of trust is best for their estate. First, they should evaluate what level of flexibility they desire and what level of control they would like to retain over their assets. They should also examine what tax benefits they would like their estate to garner from placing property in a trust. They must then assess their overarching goals in creating the trust: do they want to benefit a charity, safeguard assets for a person with special needs, or protect generational wealth. Finally, they have to weigh each factor to determine which is most important to them in order to choose which type of trust is best for their estate.

Irrevocable trusts are one of the most common types of trusts in Washington. As the name suggests, once property is placed in an irrevocable trust, it belongs to the trust and cannot be altered or removed. What irrevocable trusts lack in flexibility and the retention of control, they make up for in tax benefits in that any assets in the trust are no longer considered part of the grantor’s estate and, therefore, do not count towards the estate for tax purposes.

Revocable trusts, conversely, allow the grantor to retain control over the property in the trust, meaning that they can remove or modify it at any time. While revocable trusts may offer some tax benefits, the assets in the trust are not protected from Medicaid.

Special needs trusts may be appropriate for people who want to ensure that a loved one with a disability has adequate means to live in the future without jeopardizing their right to receive public benefits.

Charitable trusts, on the other hand, are created expressly to support certain purposes. Charitable trusts provide grantors with tax benefits, and the assets within the trust are typically safe from creditors, but Washington has strict laws regarding what constitutes a charitable trust, and if they are not created properly, the benefits of the trust may not be available to the grantor or their estate.

Talk to an Experienced Estate Planning Lawyer About Your Options

Trusts provide many benefits, but people must carefully evaluate which trust is best for their estate to take full advantage of what they have to offer. If you want to learn more about how a trust could help you achieve your estate planning goals, it is in your best interest to talk to an experienced estate planning lawyer as soon as possible. Call Gregorek & Associates at 425-284-3450 or fill out our contact form and we will be in touch to schedule a meeting.