A trust is a legal document that people use alongside their will. A trust works by having a grantor give a trustee assets. The trustee is then responsible for distributing the assets as instructed.
Revocable trusts are the most common. The grantor can alter this trust to include or remove assets and beneficiaries. Once the grantor passes away, the trust becomes irrevocable.
There are many different kinds of trust. The language in these trusts can give grantors and beneficiaries certain advantages. Here’s what you should know:
Blind trust
There’s often at least a little bit of conflict when discussing who should benefit from a high-net-worth estate. A grantor can make a blind trust that benefits individuals without the perception of favoritism. A blind trust hides detailed information about the monetary value of the trust and who should benefit from it.
Pet trust
Many people realize they will outlive their pets. A pet trust can be made to help fund the care of their pets. Funds in a pet trust may only be used for food, clothing, grooming, shelter, medication and veterinary visits.
Charitable trust
Many people fund charities, private groups and research programs during their life. A charitable trust can be made to continue funding these organizations. Funds in a charitable trust may disperse at regular intervals or at a fraction of the value of a trust.
Spendthrift trust
Many people struggle to adapt to a large inheritance. A grantor who understands that a beneficiary may irresponsibly use assets in a trust may consider making a spendthrift trust. Assets in a spendthrift trust disperse incrementally. The special wording in a spendthrift trust can help prevent issues of overspending or risky investments.
You may need to learn about your legal options when considering how to manage your assets in a trust.