People often come into estate planning attorneys’ offices knowing that they would like to get a Living Trust. These are popular instruments for estate planning because they often have tax and probate-avoidance advantages. However, what people do not always know is that not all Living Trusts are exactly the same. The “Living” in the title does not tell you as much as some people think.
First, there are two basic categories of Trusts: Living and Testamentary. All these categories tell you is when the Trust was created. A Living Trust is created while the settlor, the person creating the Trust, is alive. A Testamentary Trust is created by the settlor’s Will. Neither of these titles necessarily tell you what kind of Trust it is.
Depending on why you want to get a Trust, you can create many different types of Trusts. Trusts can be created to protect assets from an heirs’ creditors. They can be created for income tax reasons. They can be created to assist a loved one with special needs. There are many more possibilities.
When you go to see an estate planning attorney, be prepared to spend some time discussing why you want a Trust. That will help the attorney know what type of Trust you need.