When evaluating options for an estate plan, a married couple generally makes decisions together. These decisions include whether or not to establish a trust.
People should understand that they have many choices when it comes to trusts. Learning about the different types of trusts should be a first step in their estate planning process.
Joint or separate trusts
As explained by Kiplinger, spouses will need to decide how to structure their trust. This includes choosing between one joint trust or two separate trusts. Joint trusts may work well when both spouses wish the other party to inherit all assets in the trust.
In any situation with more complexity, such as a blended family, separate trusts may offer the flexibility needed. For example, a qualified terminable interest property trust allows a person to provide an income stream for the surviving spouse while preserving the trust’s assets for other parties, such as children from a first marriage.
Trusts for unique situations
According to SmartAsset, some trusts allow a person to make changes and some do not. In addition, some trusts align to very specific situations or desires on the part of the grantor.
For example, a charitable remainder trust allows a person to support a philanthropic entity by directing assets to a charity after death. A special needs trust provides support for a surviving spouse or child who may need special care due to a disability or other health condition. A person may also choose to direct assets to his or her grandchildren instead of to his or her children via a generation skipping trust.