Estate plans are frequently created at some point during an individual’s life. This allows them to prepare for what will happen to their assets in the event of their death. There are many ways this can be done, including the creation of a trust. The trustor sets this up so that a beneficiary can receive their assets. A trust is an arrangement that gives another individual, known as the trustee, the right to take care of these assets on behalf of the beneficiary.
When creating a trust, it is important to understand the different types that are available to them. There are many different types of trusts that serve their own purpose. Which one an individual decides to create depends on the assets they intend to leave behind in addition to who they are leaving them to. This allows a trustor to create a plan that is specific for the individual or entity meant to receive it. An experienced attorney can assist a trustor during this time to ensure they are creating the right trust for their plan.
Revocable Trust
One popular trust that is created in Massachusetts is a revocable trust. This type of trust can be modified, changed, or terminated at any time throughout the trustor’s life. This can be done without the beneficiary’s permission, as long as the trustor is mentally capable of doing so.
Irrevocable Trust
Another common trust that is created is an irrevocable trust. With this trust, the trustor is required to give up their rights to the assets as soon as it is created. In doing so, the trustor no longer has any rights to their assets or the trust. This means they are unable to make changes or terminate it at any point during their life.
Irrevocable Life Insurance Trust
This type of trust allows the trustor to remove their life insurance from their estate. When this is done, the beneficiary may be free from paying any taxes that are placed on the trustor’s life insurance policy through the estate.
Charitable Trusts
When dealing with charitable trusts, it is important to know that there are two different types. A charitable leads trust lets the trustor choose what charities will receive interest from their gift for a determined period of time. Once this period is over, whatever is left of the trust may be given to the trustor’s family or other beneficiaries. The other type of charitable trust is a charitable remainder trust. This allows charities to receive the assets once the trust term ends. Until then, the donor receives interest on the gift instead of the charity.
Special Needs Trust
A special needs trust can be created if the trustor has a loved one with a disability. This supplements any benefits that the individual with special needs may be given from government programs. With this, the trustor is able to make sure this individual receives any necessary financial support throughout their life.
Contact our Firm
If you require compassionate and knowledgeable legal guidance for a matter of divorce, family or estate law, please contact the experienced attorneys at the Law Offices of Cynthia L. Hanley today. Our firm proudly serves clients in Mansfield, Massachusetts and throughout Bristol County.
