In my last article, we delved into basic trusts. We defined what they are, and how each type is used. Well, in this follow up article we dive into the weeds, so to speak. This article is an exhaustive list of the most common types of trusts, and will take you from A-Z, as we discuss the thirty-nine — yes, you read that correctly — types. So strap in as I make all these trust types that can be used in your financial planning, financially simple.
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You are probably thinking “Justin, I had no idea there were so many types of trusts”. There’s a lot we don’t know about the fields outside of our expertise.
Just this past weekend, I was fishing, in West Virginia, with my son and some clients. As we fished, I saw a fish that I had never heard of before, called a Tiger Muskie. I didn’t catch it, but I was able to get a pretty close look at it. The point is, while I am an experienced fisherman, there is still plenty of fish out there that I’ve never seen or heard of. The same is true in our business and financial lives. There will always be more to learn. With that said, let’s get down to finding out about a topic you might be deficient about.
Before we really dig into the meat of our subject today, I wanted to take a moment to explain why we are taking such a close look at all these trust types. Each serves a specific function in the protection of your assets, minimizing your taxes, and providing for the people you most care about. Not only are they unique in their individual strategies and abilities, but they often work very well with each other to provide the greatest benefit. Understanding the ins and outs of the different types of trusts can help you to get the most out of your plans for the future.
The goal of most of the trusts that we’ve covered is to minimize the amount of income tax you will be responsible for. Now, that’s not to say that this should be used as a means of dishonesty, but rather that there are allowances and exemptions — if you know where to look — that will allow you to protect your assets and sustain them for the people you love the most. It is important to speak to your attorney when planning and creating your trusts, in order to make sure that you utilize all of the tools available to you, while also keeping within the guidelines of the law.
There you have it, the complete and exhaustive list of the most common trusts used for planning. We can never be sure of how much time we have left, but with a little planning, we can know that we are prepared for the inevitable. Thank you for following me down this rabbit-hole. I hope that it has cleared things up for you, and helps you on your path to living financially simple.
Be sure to follow along throughout my series on Risk Management in the Financially Simple Blog and on the Financially Simple Podcast!