Your will is an important part of your estate plan, but you might also need to establish trusts to dole out your assets when you pass away. There are many different types of trusts, so you have to think about what goals you have for those assets and what circumstances are present.
One of the most important considerations when you are setting up trusts is whether you need a revocable or an irrevocable trust. The primary difference is that you can change the revocable trust if you decide that it doesn’t reflect your wishes. Once you set up the irrevocable trust, you can’t change it unless the beneficiary agrees to the changes.
Another way that these differ is that the irrevocable trusts provide some protections from creditors. Once you place items in an irrevocable trust, you don’t have control over it. This means that legally, they aren’t owned by you. If a creditor has a claim against you, they can’t try to get that asset.
Each type of trust has some tax implications that you need to look into. These depend on the specifics of the situation, so consult someone familiar with this aspect of trusts prior to making decisions about what you are going to do.
When you set up trusts, you set up a trustee over each account. This person handles everything related to the trust, including distributing them in accordance with your wishes.
Remember that anything you put into trusts doesn’t need to be in the will. Your will is only for assets that don’t have another method of distribution. Life insurance, bank, investment and retirement accounts should all have beneficiaries named, so you won’t put these in the will.