Trusts are legal instruments that allow you to transfer assets to another person or entity, called a trustee, for safekeeping and management for the benefit of one or several persons, called beneficiaries. Trusts can be used for several purposes, among them:

• To avoid probate. By creating a trust, your assets are transferred to the trust and are no longer subject to probate, which can be a lengthy and costly process.
• To protect your assets from creditors. Trusts can protect your property from creditors, both during your lifetime and after your death.
• To provide for minor children. Trusts can be used to provide financial support for minor children until they reach the age of majority.
• To care for disabled beneficiaries. Trusts can be used to provide financial support and care for disabled beneficiaries.
• To reduce estate taxes. Trusts can be set up to minimize estate taxes by transferring assets to beneficiaries prior to their death.

There are many different types of trusts, each with its own specific purpose. Some of the more usual types of trusts are:

Revocable trusts

Revocable trusts, also known as living trusts, are trusts that can be changed or revoked by the grantor at any time during his or her lifetime. Revocable trusts are generally employed to avoid probate and to provide financial support for minor children.

Irrevocable trusts

Irrevocable trusts are trusts that cannot be changed or revoked by the grantor after they are created. Irrevocable trusts are typically set up to reduce estate taxes and protect assets from creditors.

Testamentary trusts

Testamentary trusts are created in a will and become effective upon the grantor’s death. Testamentary trusts can be created for a variety of purposes, such as caring for minor children, caring for disabled beneficiaries, and reducing estate taxes.

Special purpose trusts

Special purpose trusts are trusts that are designed for specific purposes, such as charitable trusts, asset protection trusts, and generation-skipping trusts.

Charitable trusts

Charitable trusts are designed to benefit one or more charitable organizations. Charitable trusts can be established to reduce estate taxes and make charitable donations.

Asset protection trusts

Asset protection trusts are trusts that are designed to protect assets from creditors. Business owners and high-net-worth individuals often use asset protection trusts.

Generation-skipping trusts

Generation-skipping trusts are trusts that are designed to transfer assets directly to grandchildren or other descendants, skipping over a generation. Generation-skipping trusts can be used to reduce estate taxes and to create a legacy for future generations.

Which type of trust is right for you depends on your individual needs and circumstances. It is essential to speak with an expert estate planning attorney to analyze your options and create a trust that is adapted to your specific needs.

Here are some additional benefits of trusts:

Trusts can provide privacy. When you create a trust, your assets are no longer subject to public scrutiny during the probate process.

• Trusts can provide flexibility. They can be customized to your specific needs and objectives.
• Trusts can provide professional management. Trustees are in charge of managing the trust assets and distributing them to the beneficiaries in accordance with the terms of the trust agreement.

If you are planning to create a trust, it is crucial that you work with an expert estate planning attorney to discuss your options and create a trust that is adapted to your specific requirements.