Trusts are an important part of estate planning. In addition to or instead of a will, they can make sure your heirs receive the right assets you plan on leaving them. There are many kinds of trusts, and each one acts differently.
The first two are revocable and irrevocable trusts. As the names suggest, a revocable trust can be altered or cancelled after its creation, but an irrevocable trust cannot. A revocable trust, or living trust, transfers assets while the trustmaker is still living and often becomes irrevocable after their death.
Next is the charitable trust. This leaves assets to a charity or the general public and diminishes taxes on this gift. Another trust that dodges taxes is aptly called the tax by-pass trust. This leaves money directly to a surviving spouse without it being touched by the federal government.
To avoid creditors, some people set up assets protection trusts. These are typically set up for foreign assets while the trustmaker is living. Assets are essentially frozen for a set amount of years, typically long enough for creditors to be paid. Another trust that protects assets is the spendthrift trust, which prevents beneficiaries from selling off any assets, which prevents creditors from touching them.
A special needs trust is one in which a person with disabilities is the recipient. That way, gift taxes and classifications do not hinder or eliminate the benefits. This can become a complicated topic and should be discussed with an attorney.
The final two kinds of trust are Totten and constructive. A Totten trust essentially leaves a specific bank account to the beneficiary, which avoids probate. A constructive trust is one in which there was never an official trust written, but the beneficiaries of certain assets were implied.
Choosing the right trust and setting it up in Nevada can be difficult. Having an attorney help you with it may be beneficial.