A trust is an estate-planning tool available to attorneys and clients to help achieve a multitude of goals. It does not necessarily replace a will, but supplements one. For example, even if all of your assets are held in a trust, your estate plan should include a “pour-over will,” simply providing that if there are any other assets discovered at death, then those later-discovered assets should also be transferred to and distributed pursuant to the instructions in the trust.
Trusts come in many different shapes, sizes and forms. One type does not fit all. Sometimes clients will come into the office and ask for a specific type of trust based upon something they may have heard without knowing what that type of trust means, or what other options are available. Here are examples of some common types of trusts and their definitions:
Testamentary Trust: A trust contained within a last will and testament
Revocable Living Trust: A trust created during the lifetime of the grantor with powers to change or revoke
Irrevocable Life Insurance Trust: A type of trust used to reduce or eliminate federal estate tax by transferring a life insurance policy to the trust
Special Needs Trust: A trust set up to benefit a person who receives governmental assistance. The trust supplements but does not replace the assistance
Charitable Trust: A type of trust set up to benefit a charity
These are only some of the variations, forms or definitions of trusts. Remember, it is not the label or title that is important, it is the content. An attorney can help you draft a trust to meet your specific goals if you decide that a trust is beneficial and should be part of your estate plan.
Anne Hensley Poindexter, Partner
CAMPBELL KYLE PROFFITT LLP