If you have assets that you wish to leave to your loved ones but have concerns about simply handing over a significant amount of wealth to someone who may not be ready for it, the solution may be a trust.
Trusts fall into two primary categories, largely having to do with whether the trust was put in place during your lifetime or is scheduled to begin upon your death. The latter is a testamentary trust and is often included in a will so that your wishes during life can be reinforced following your death.
For instance, if you believe a higher education is necessary, you may have a provision in your trust that it will only be meted out once the beneficiary graduates from college. You may even include provisions that further portions will be earned for Masters program completion and so on.
Because the testamentary trust is included in a will in most cases and is never an automatic occurrence upon the death of the grantor, it is usually subjected to probate before the trust begins.
A living trust, as the name may convey, begins while you are still living. This form of trust can usually skirt probate altogether, especially if you can manage to have all of the assets included in the trust transferred to the trust before your death. There are two forms of this type of trust. It will either be revocable, which means at any time you can change the terms or cancel the trust, or it will be irrevocable, which means once you sign off on it, you relinquish all rights to revise it. The revocable trust usually supplements a will or is used to designate a trustee to manage the trust upon your potential incapacitation. But even this form of trust would become irrevocable upon your death; the revocation allowance only regards you in a living trust.
When it comes to matters of money and financial assistance, you don’t want a sudden demand for financial maturity to come with your death and add an additional burden to loved ones who aren’t yet ready to handle it. Your estate planning attorney can assist you with the right language and terms to prevent this and will help you identify the estate plan that best meets your wishes.