It is not uncommon for individuals to feel intimidated by the scope of an estate plan. While developing a comprehensive estate plan can be a complex undertaking, the flexibility allows people to determine the distribution of their assets and prevent unnecessary familial disputes in the future.
An estate plan generally consists of numerous documents including a will, trust and powers of attorney. These documents are all drafted for different reasons. A will is mainly for the distribution of assets to heirs. Powers of attorney identify individuals who will make medical or financial decisions should the creator of the estate plan become incapacitated. Trusts, however, typically deal with financial matters.
Trusts can either be revocable (able to be altered after their creation) or irrevocable (not able to be revised after their creation) and can be written for numerous purposes, including:
- Special needs trusts: This trust can be set up for a person who currently receives disability benefits through a government program. The trust is designed to provide financial support without disqualifying the individual from receiving future benefits.
- Charitable trusts: This trust can be set up to benefit a specific charity or charitable public works in general. Donations can be scheduled out or delivered in a lump sum.
- Spendthrift trusts: This trust can be developed to essentially prevent beneficiaries from selling or pledging away interests in the trust.
- Pet trusts: This trust can be written to provide for the care and maintenance of one or more companion animals.
- Cabin trusts: These trusts can be set up to protect a cabin, cottage or other recreational property for your family’s use in the future.
By forming a trust, you can protect your family’s assets and provide financial security for your surviving loved ones. These documents provide peace of mind knowing that you have established your wishes for the future and helped eliminate emotional debates after your death.