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When it comes to creating a trust, it’s important to understand that there is more than one type available to you depending on your needs. Understanding the different types and how they work will help you determine which one is right for you.
A revocable living trust is a legal arrangement that specifies how you want your assets to be distributed after your death. It is created during your lifetime, and its main purpose is to avoid probate. Probate is the legal process for managing a deceased person's estate. It confirms their will, if there is one, and oversees the distribution of assets to heirs or beneficiaries. A revocable trust simplifies the administration of your assets and eliminates the need for court involvement.
An irrevocable trust cannot be changed once it's created, unless you obtain a court order. An irrevocable trust is especially important for those with large estates facing high taxes. Typically, setting up an irrevocable trust for these assets can help protect you from taxes and reduce tax burden.
If you have significant assets, an asset protection trust might be a good option. Its purpose is to protect your assets from possible future creditors. A key aspect is that it can't be changed for a certain number of years, during which you cannot access the assets.
A charitable remainder trust allows you to donate assets to a charity while receiving income from those assets during your lifetime. You fund the trust, which provides income for a specified period or for life, with remaining assets going to your chosen charity afterward. This trust offers potential tax deductions, reduces the taxable estate, and ensures your legacy supports a meaningful cause after your death.
If you have a child who receives social security income, consider setting up a special needs trust. Your assets are allocated to this trust to guarantee continued eligibility for government benefits. This trust is meant to supplement the government benefits. This valuable tool ensures that your beneficiary with special needs receives resources to cover expenses not included in their government benefits.
The right trust or combination of trusts depends on your estate planning goals and the value of your estate. At Pacific Service CU, we've partnered with Affinity Trusts to offer our members trust and estate planning services at discounted rates. For more information, visit our website or call a member service representative today at (888) 858-6878.