Understanding wills and trusts

Creating a will, revocable trust or irrevocable trust starts by considering your goals and objectives. A trust can be a valuable tool in your overall wealth plan. Many wealth plans include one or more types of trusts, each of which fulfills a specific need.

Whether you’re leaving a bequest to a charity, providing income for your spouse or giving assets to your children or grandchildren, a trust can be an effective way to build your legacy. 

Some trusts can be modified after they’re created, while others can’t. It’s important to consult with your attorney and wealth professional to determine your intent, so together they can ensure that the appropriate provisions are built into your plan.

Revocable vs. irrevocable trusts and wills: how they compare

Revocable living trusts

Also known as living trusts, revocable trusts allow you to retain control of your assets during your lifetime. You can change your trust at any time.

How a revocable trust is like a will:

  • Both are estate planning documents.
  • Each reflects your wishes regarding asset distribution.
  • Both concern assets that are included in your taxable estate (for estate and inheritance tax purposes).

 

How a revocable trust and a will differ:

  • A revocable trust allows you to avoid probate – which can be a very public and lengthy process – while a will does not.
  • The trustee of your revocable trust can act for you in case of your incapacity to ensure that your needs are met, and your assets are managed appropriately.

Irrevocable trusts

Irrevocable trusts can support a variety of goals such as providing financial security for your family and promoting charitable causes. They generally can’t be changed after they’re established, subject to state law.

Examples include:

  • Charitable lead or remainder trusts
  • Credit shelter trusts
  • Domestic asset protection trusts (DAPTs)
  • Dynasty trusts
  • Grantor retained annuity trusts (GRATs)
  • Marital deduction trusts
  • Qualified personal residence trusts (QPRTs)
  • Qualified terminable interest property trusts (QTIPs)
  • Special needs trusts

Insights from our experts

Types of trusts: Choosing the right one for you

The kind of trust you select should reflect your unique wishes for how your assets are handled now and in the future.

Estate planning as a family

An open dialogue with family members can help you successfully craft your estate plan.

How to set up a trust

A trust requires careful administration, but setting one up is a fairly simple process that generally involves five steps.

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