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Including trusts in your estate plan to achieve specific goals

On Behalf of | Feb 26, 2024 | Estate Planning |

Trusts are legal arrangements wherein assets are held and managed by a trustee on behalf of the trust’s beneficiaries. These allow for customization in the way assets are handled and may be included as part of a comprehensive estate plan.

Trusts can be tailored to meet specific family needs, tax planning goals and philanthropic desires. All trusts are classified as either revocable or irrevocable, depending on whether the creator can change the trust during the remainder of their lifetime or not. The following are just a few of the kinds of trusts that can be included in an estate plan in order to achieve specific goals.

Special needs

A special needs trust can help to support a person who relies on needs-based programs without affecting their eligibility for those programs. These trusts must be carefully structured. By setting up a special needs trust, a grantor can help ensure that a loved one with disabilities receives the financial support they need over their lifetime, covering expenses that government benefits don’t, such as personal care attendants, out-of-pocket medical costs and recreational activities.

Charitable trusts

Charitable trusts are another type of trust utilized in estate planning, offering a way to combine philanthropic goals with estate planning objectives. Charitable lead trusts (CLTs) and charitable remainder trusts (CRTs) are the two primary forms. Both types of charitable trusts offer significant tax benefits, including deductions on income taxes and the potential to reduce or eliminate estate taxes.

A CLT allows the grantor to provide a fixed annual gift to a charity for a specified term, with the remaining assets eventually passing to non-charitable beneficiaries. A CRT provides an income stream to non-charitable beneficiaries for a term or life, with the remainder going to charity.

Working with a legal representative who can provide assistance concerning various types of trusts is often beneficial, as this relationship can help people to make informed decisions about their options. Ultimately, the goal is to create a comprehensive estate plan that meets a creator’s visions for their beneficiaries during life and/or after death.