Setting Up a Trust in Your Estate Plan
Part of the Estate Planning For Dummies Cheat Sheet
Trusts can be a great help in your estate planning — they can protect your property, save on estate taxes, and help you avoid probate. Sounds great, right? Well, before seriously considering a trust, you need to understand the basics of trusts and make a well-informed decision about setting up trusts right for you.
Some trusts are general-purpose; others focus on specific objectives, such as supporting your favorite charity or helping to pay for your children's or grandchildren's education.
A revocable living trust may be an ideal tool to protect your estate. But beware — everyone, it seems, is trying to sell you a revocable living trust. Watch out for the hype!
A bypass trust or a QTIP trust can help you and your spouse avoid unnecessary federal estate taxes. But you need to decide which type of trust works best in your situation.
Some trusts are revocable, meaning that you can change your mind. Other trusts are irrevocable — they can't be changed once you set them up. Make sure you understand the tradeoffs for your estate planning.