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At NovaPoint, we believe wealth planning is about more than just numbers. It’s about making sure the assets you’ve worked hard to build are protected, thoughtfully managed, and passed down according to your wishes.
Trusts are a powerful part of that strategy. But with so many types available, it can be difficult to know which one is the best fit for your unique situation. This guide is designed to help you understand the most common types of trusts, how they work, and when they might make sense in your financial plan.
Living Trust
A living trust is created during your lifetime. It allows you to manage your assets while you’re alive and decide how they’ll be distributed after your death.
One of the main benefits of a living trust is that it helps your estate avoid probate. That means your financial affairs stay private, and your loved ones don’t have to navigate a lengthy or costly legal process.
Revocable Trust
A revocable trust is a type of living trust that can be changed, updated, or dissolved at any time. It gives you flexibility and control, which is helpful if your circumstances or intentions shift over time.
While revocable trusts don’t reduce estate taxes, they’re an excellent option if you want to maintain control while ensuring a smooth and private transfer of assets.
Irrevocable Trust
An irrevocable trust, once created, typically cannot be altered. That might sound limiting, but the benefits can be significant.
By giving up ownership of the assets, you may be able to lower your estate tax liability and shield those assets from creditors. For individuals or families with high net worth, especially those above the federal estate tax exemption ($13.99 million in 2025) this can be a key strategy.
Because of their complexity, these trusts usually require legal assistance. NovaPoint partners with experienced professionals to make the process more accessible and cost-effective.
Life Insurance Trust
If you have a significant life insurance policy, a life insurance trust can help keep the policy proceeds out of your taxable estate.
This type of trust not only offers potential tax savings but also gives you greater control over how the life insurance payout is distributed to your beneficiaries.
Charitable Trust
A charitable trust allows you to donate assets to a charitable cause while receiving certain tax advantages. You can claim deductions, reduce estate taxes, and protect donated assets from creditors.
However, once you transfer assets into a charitable trust, they are no longer under your direct control, and you must follow IRS regulations closely.
Special Needs Trust
If you have a loved one with a disability, a special needs trust is a thoughtful way to provide financial support without affecting their eligibility for government assistance programs.
This type of trust helps maintain their quality of life while ensuring long-term financial security.
Testamentary Trust
A testamentary trust is written into your will and only goes into effect after your death. Unlike living trusts, it does not avoid probate, but it can provide structure for how your assets are managed and distributed.
These trusts are especially useful when leaving assets to minors or beneficiaries who may need help managing their inheritance.
Choosing the Right Trust for Your Needs
Each trust serves a different purpose, and the best choice depends on your goals — whether that’s minimizing taxes, protecting your privacy, caring for a loved one, or supporting a cause.
At NovaPoint, we make it easy to understand your options. Whether you’re starting with a simple revocable trust or looking into more advanced strategies, we guide you through the process clearly and efficiently. We also work with trusted estate attorneys to ensure you get the right legal support without the high legal fees.
Ready to Take the Next Step?
If you’re considering how a trust might fit into your overall wealth plan, we’re here to help. Contact NovaPoint to schedule a personalized consultation and start building a legacy that lasts.
Written by Blake McDaniel, Investment Associate, Financial Planning Team
NovaPoint – Financial Planning and Wealth Management
To download a printable copy click here: Unlocking the Power of Trusts
To learn more about these topics and our investment strategies, call us at 404-445-7885 or contact us here.
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