Many Washington, D.C., residents wait to undergo the estate planning process because they feel overwhelmed by it. The reality is that estate planning can be a fairly easy process when you understand what is involved. One of the biggest aspects of estate planning that you’ll need to understand is a trust.
Defining what a trust is
The topic of estate law almost always includes the legal term known as a trust. This is a legally binding agreement made between two different parties. The person giving the asset is referred to as the trustor or grantor. The person managing the assets is the trustee. In many cases, the same person will hold both of these positions until their death. Then, the assets in the trust will be passed onto a named beneficiary.
Revocable vs. irrevocable trusts
When you decide to set up a trust, it can be classified as revocable or irrevocable. In a revocable trust, also referred to as a living trust, you may decide to dissolve the trust in the future. With an irrevocable trust, you’re no longer able to modify or dissolve it. Therefore, it’s very important that you choose wisely when deciding what type of trust is best for your situation.
There are many other types of specific trusts that fall into these two main categories. Some of the most popular include marital trusts, bypass trusts, generation-skipping trusts, life insurance trusts, charitable trusts, special needs trusts, testamentary trusts and spendthrift trusts.
There are many different types of trusts that you can set up as part of your estate planning process. While it may be daunting at first, an experienced lawyer may assist you throughout the entire process. Be sure that you take your time and ensure that you’re happy with your decision before making any plans official.