There are many kinds of trusts that you could opt for to create for your beneficiaries. Each type has its own benefits to consider. For example, a credit-shelter trust helps you give your estate to your spouse tax-free while also stating who you want to receive the trust. When your spouse passes away, you can even determine who will receive the remaining principal tax-free.
Another type of trust to consider is an irrevocable life insurance trust, or ILIT. This helps remove the life insurance policy from your estate, so it's not taxed. You can then use that money to pay costs associated with the estate or give that money to beneficiaries.
If you have a pet, a pet trust is another option. A pet trust dictates who cares for your pet after your death or in the case that you are unable to do so due to disability. You can fund the account with cash or assets as you see fit, and it extends for the life of your pet.
A trust you might be interested in if you have grandchildren or great grandchildren is a generation-skipping trust. It allows you to give money to your family members at least two generations younger than you. You can also give your children the right to access the funds to provide for your grandchildren, the true beneficiaries.
It's important to talk to your attorney about each of the trusts you're considering. There are limits to meet for a tax-exempt status, so if you go over, your beneficiaries may be liable for taxes on the amount you give them. Our website has more information.