As your parents age, caring for their financial wellness is often just as important as looking after their physical and emotional well-being. Establishing a trust can prevent the loss of money via fraud and dishonest individuals from draining your elderly parents’ savings or the theft of other valuable assets.
Senior Living.org reports that creating a trust can prevent any heirs from having to enter probate, a legal process that can entangle them and any gifts or inheritances they may otherwise receive. Before you do so, you may want to understand a few differences between certain types of trusts so you can choose one that best suits your parents’ needs.
Revocable living trust
A revocable living trust acts much like a will, with a few differences that make it changeable. As the trustee, you can list heirs, what they receive and when and who acts as the new trustee if you should ever need to give up the responsibility. This can not only avoid probate but allow you to make changes as you need to, depending on the needs of your parents and the heirs as well.
A testamentary trust allows you to arrange inheritances for those heirs who are still minors and cannot legally receive large amounts of money or property. Depending on your parents’ wishes, you can place the funds and property into the care of the trust until the children come of age, such as when they turn 18 or 21.
Living trusts can also protect funds for disabled heirs and those who have other circumstances that require protection. Most types of trusts allow for more than one trustee, which can help balance the duties that come with the responsibility.