Trusts are a type of legal arrangement that can be used to protect your assets and property. If you’re considering setting up a trust, it’s important to understand the different types of trusts available, as well as the benefits and drawbacks of each.

1. Revocable Trusts

A revocable trust, also known as a living trust, is a type of trust that can be modified or terminated by the person who created it – typically the grantor or settlor. This makes revocable trusts a popular choice for estate planning, as they can be easily changed to reflect the grantor’s wishes.

Revocable trusts have a number of benefits. For one, they can help avoid probate, which can be lengthy and expensive. They can also provide privacy, as the terms of the trust are not made public.

However, there are some drawbacks to consider. Revocable trusts are not legally binding until the grantor dies, which means that if something happens to the grantor before he or she passes away, the trust becomes null and void. In addition, since the grantor remains in control of the trust, he or she is also responsible for any taxes or penalties that may apply.

If you’re considering a revocable trust, it’s important to speak with an attorney to learn more about your options and how this type of trust could benefit you.

2. Irrevocable Trusts

An irrevocable trust is a type of trust that cannot be modified or terminated by the grantor – once it’s been created, it’s set in stone. This makes irrevocable trusts much more permanent than revocable trusts, which can be changed at any time.

There are several benefits to setting up an irrevocable trust. For one, it can help you avoid probate and estate taxes. It can also protect your assets from creditors and lawsuits.

However, there are some disadvantages to regard as well. Once an irrevocable trust is created, the grantor gives up all control over the assets – meaning that if the grantor needs access to the funds for any reason, he or she will need to get permission from the beneficiaries. In addition, setting up an irrevocable trust can be complex and time-consuming.

If you’re considering an irrevocable trust, it’s important to speak with an attorney to learn more about the process and whether this type of trust is right for you.

3. Charitable Trusts

A charitable trust is a type of trust that’s used to provide financial support to a nonprofit organization. There are two main types of charitable trusts: donor-advised funds and private foundations.

Donor-advised funds are set up by individuals, families, or businesses to support a specific charity or charities. The donor typically makes a large donation to the fund, which is then managed by a financial institution. The donor can advise the fund on how to distribute the money, but ultimately it’s up to the financial institution to make the final decision.

Private foundations are similar to donor-advised funds, but they’re usually set up by larger organizations or corporations. Private foundations are also required to distribute a certain percentage of their assets each year, which is known as the payout rate.

4. Special Needs Trusts

A special needs trust is a type of trust that’s used to provide financial support for someone with a disability. The money in the trust can be used to cover the beneficiary’s basic needs, such as food, clothing, and shelter. It can also be used to pay for medical expenses, education, and other costs associated with the beneficiary’s disability.

There are two main types of special needs trusts: first-party trusts and third-party trusts. First-party trusts are funded by the disabled individual’s own assets, while third-party trusts are funded by someone else – typically a parent, grandparent, or other relative.

Special needs trusts can be used to supplement government benefits, such as Social Security and Medicaid. They can also help protect the beneficiary’s assets from being used up by medical expenses.

If you’re considering a special needs trust, it’s important to speak with an attorney to learn more about the process and whether this type of trust is right for you. If you need help with family law, contact us today at (470) 291-5342 to schedule a case evaluation.