Types of Trusts in Virginia Beach

Trusts are an important and useful part of the estate planning process, but there are numerous options to choose from. The different types of trusts in Virginia Beach are useful for planning not only how your assets are distributed at the end of your life but also for protecting the income you rely on today.

Creating these legal entities is an important decision that should not be taken lightly. A single mistake could upend your entire plan and complicate things both now and in the future. Let a skilled trusts lawyer advise you on your options.

Revocable vs. Irrevocable Trusts

While there are many different types of Virginia Beach trusts, it is also important to understand the categories. Irrevocability is a characteristic of certain trusts. These instruments cannot be canceled or changed after they are created outside of a handful of circumstances. The reason that people choose this restrictive option is that significant tax benefits come with irrevocable trusts. Altering the terms of controlling documents might be possible if every interested party agrees, but otherwise, a court order will be necessary.

Other options are revocable, meaning the creator can amend or even terminate a trust at any point during their lifetime. While there might not be the same tax benefits, the additional control is important for some individuals.

Categories of Trusts

In Virginia Beach, there are many different types of trusts to choose from. They include the following options:

Special Needs Trusts

A special needs trust is created to provide for the needs of a person with a physical or mental disability. Instead of offering them direct support as their primary source of income, the real purpose of these entities is to help that individual while ensuring they remain eligible for income-based support from the government. For example, a large inheritance could render someone no longer eligible for full Medicaid benefits. This approach avoids that issue.

Charitable Trusts

These legal entities are designed to benefit specific charities. They can come in different forms, but they usually either provide the charity with the remainder of a trust at the end of the creator’s life or they pay out annual benefits for as long as an individual is living.

Asset Protection Trusts

Commonly referred to as spendthrifts, this estate planning tool is designed to protect assets against future claims from creditors or other interested parties. In many cases, these trusts are irrevocable for a period of time before allowing the beneficiary to terminate the entity and inherit the assets.

Retirement Trusts

In the event that your child or grandchild needs creditor protection or protection from their own decisions, you can direct your retirement assets to a trust for a child’s benefit instead of to the child outright. The Trustee is in charge of withdrawing the retirement assets when required to do so, then either paying them out to the beneficiary in accordance with a schedule or keeping the withdrawn benefits in further trust for the future benefit of that child or grandchild. This is a particularly popular option for estate planners.

Learn More About Types of Trusts in Virginia Beach

These are only some of the trusts in Virginia Beach. If you have questions about how to make the most out of your estate plan, now is the right time to ask. An attorney can review your current financial situation and help you decide how to plan for the short- and long-term future. Call today for a private consultation.