There are different types of wills and trusts that can be drawn up to help individuals manage their estate and plan for a future when they might not be around or capable of doing so for themselves. These legal documents must adhere to different standards in order to maintain their validity and it is important to understand the distinctions between each type to help you make the right choice for your particular situation.
A simple will, for instance, is a good choice when all you require is to leave a straightforward direction on the distribution of simple assets from your estate to your beneficiaries. This is ideal for assets that are relatively uncomplicated in nature.
A testamentary trust will, on the other hand, includes provisions for placing a portion of the estate into a trust. The terms of a testamentary trust dictate how assets should be distributed to beneficiaries through the named trustees in control of such assets.
Mirror wills are typically drafted by spouses who wish to leave their properties to the surviving partner so they can inherit the estate of their deceased spouse, whereas a living will provides detailed instructions on the kind of life saving measures or medical treatments a person wants to pursue should they be rendered unable to communicate these wishes themselves.
There are also several types of trusts that you can choose from as you create an estate plan. Revocable trusts are trusts that can be altered, modified, or entirely revoked during an individual’s lifetime, as opposed to an irrevocable trust, which cannot in any way be altered, modified, changed, or revoked once created. For instance, a property or asset that’s been transferred to an irrevocable trust cannot be taken out of it by anyone, including the trustmaker.
An asset protection trust protects a person’s assets from creditor claims, effectively insulating assets from any type of creditor attack.
A charitable trust is one that benefits a certain charity or the general public, while a constructive trust can be described as an implied trust or one that is established by the court, according to particular facts and circumstances.
