The Woodlands, TX estates & probate attorney James H. Stilwell discusses the common types of trusts that are commonly used in estate planning. When discussing trusts with clients, they typically address two primary categories. The first category pertains to trusts incorporated within a will. In such cases, if clients have underage children and are concerned about the possibility of unexpected events befalling them, they may prefer not to grant immediate access to their children’s inheritance. In response, trust arrangements for minors within wills are often established to safeguard these assets until the heirs reach an appropriate age for financial responsibility.

Similarly, clients facing unique circumstances, such as individuals with special needs, may require trusts to manage their assets. These trusts are designed to provide financial support and asset management for individuals who are unable to do so themselves, often due to reasons other than age, such as health conditions like Alzheimer’s or dementia.

Another type of trust frequently created within wills serves individuals with capacity issues, encompassing conditions such as Alzheimer’s, dementia, or other mental health challenges. These trusts are structured to ensure responsible asset management for those who might struggle to oversee their own financial affairs.

Beyond these categories, there are also trusts designed for tax planning purposes. Individuals with substantial wealth, subject to federal estate taxes, can benefit from establishing trusts aimed at minimizing their tax liabilities.

The last category mentioned involves trusts situated outside of wills, commonly known as revocable living trusts. Over the years, these trusts have gained popularity among those seeking to streamline their estate planning and avoid probate. Such trusts facilitate the transfer of assets into a trust during a person’s lifetime, ultimately helping to circumvent the probate process upon their passing.