Estate planning isn’t fun, at least for most people. It often requires deep thought and planning to decide how your estate and assets will be divided once you pass on. So it makes complete sense why estate planning isn’t fun.
However, it is a necessary step that every adult should take. One aspect that every person should consider is setting up a trust to protect or assign their financials to relatives or organizations. These are three different trusts to consider in your plan.
Community property trust
Each trust is designed to meet the needs of the estate holder, whether alive or passed on. For a community property trust, a holder can convert their personal or joint-owned property to “community property.” Essentially, it allows the owner of the property to be equal by spouses.
It has excellent tax benefits for a surviving spouse in Tennessee and applies to all types of assets. However, there are specific guidelines you have to meet before using the trust, including:
- A trust agreement specifies that it is a community property trust for the state of Tennessee.
- One or both spouses is a resident of Tennessee.
- Both spouses sign the trust.
- It contains a notice of the tax and legal implications of the trust.
Without all four requirements, the trust is not valid.
But trusts do not only need to focus on relatives or spouses. Anyone can establish a charitable trust, where a portion of the estate is devoted to one or more charitable purposes. Often, wealthy donors create charitable trusts to reap in tax benefits while providing an excellent service.
Over time, more people are creating specifically charitable trusts to give back to charities or organizations that helped them or others in the country. For example, a passionate animal lover may consider making a trust centered on animal rescue organizations.
Special needs trust
A special needs trust is unique because it will only apply to people who have special needs or parents of a disabled child. These trusts are crucial to protecting people who receive government benefits so as not disqualify the beneficiary from benefits.
This specific trust can also be used to help maintain a certain standard of living for a disabled adult or child after a parent passes away. It can include details such as their treatment, dental expenses and essential dietary needs.
All trusts, including special needs trust, can be tailored to your specific situation. You may be surprised by the amount of detail you can incorporate into your estate plan. Consult with a professional or estate planner with questions about your trusts.