How Do I Know Which Type of Trust I Need?

A trust is a powerful estate-planning tool for seamlessly transferring wealth to beneficiaries, avoiding probate and minimizing estate taxes. With a trust, you can protect your legacy and closely manage fund distribution. Different types of trusts suit different purposes, and the right trust for you depends on your situation, beneficiaries and the level of flexibility you need.

Start with the Big Picture

To decide which type of trust is best for you, consider your overarching estate planning goals. Do you want to support a loved one’s education? Leave money to a charity? Or perhaps you need to ensure a family member with special needs receives the assistance they need without compromising their Social Security benefits. Trusts can meet these needs and more. Here are a few of the most common types of trusts, and the pros and cons of each.

Types of Trusts

Living Trust

Start with the big picture

A living trust, or revocable trust, can be changed during your lifetime. You control the assets in the trust, and you can dissolve the trust at any time. You can be the trustee of your own living trust and appoint a successor trustee in the event of your incapacitation or death.

  • Pros of a Living Trust 

    In most cases, you avoid probate. Probate can be lengthy, keeping assets tied up when your loved ones need support. 

    Succession planning. The rules for succession are specified so you can easily plan for worst-case scenarios.

  • Cons of a Living Trust 

    Funding the trust is time-consuming. You’ll need to make sure you transfer all assets – including future assets – to the trust, or they remain subject to probate.You’ll still need a will. Your will must account for any assets that didn’t pass into the trust. If you wrote your will before setting up your trust, you should revisit it with your trust in mind.

Charitable Trusts

Charitable pass assets in a trust to a designated charity. Charitable trusts can be either revocable or irrevocable. A charitable remainder trust, for example, is irrevocable and pays you or another designated beneficiary an income for a pre-determined period. After that, the assets pass to a designated charity.

  • Pros of a Charitable Remainder Trust 

    You can donate generously while receiving a tax break. Charitable trusts allow you to spread their income tax deduction over five years (subject to tax law changes).You still receive income. You can ensure you or your beneficiary receives sufficient income while supporting a philanthropic cause.

  • Cons of a Charitable Remainder Trust 

    You transfer control of the assets to the charity. This means the charity manages the investments.Your contribution must be sizeable. You need to contribute enough to generate income, so this type of trust is best suited to large contributions.

Special Needs Trust

Special Needs Trust

A special needs trust supports a beneficiary with a disability or special needs. This type of trust is designed to allow the beneficiary to still receive Social Security benefits, Medicaid and Supplemental Security Income. While a large cash gift would typically prevent someone from receiving Medicaid, a special needs trust allows the beneficiary to receive the funds they need while still receiving government-issued financial support.

  • Pros of a Special Needs Trust 

    Overseen by a trustee. You choose a trustee to direct spending, ensuring reliable support for your loved one.Does not interfere with government benefits. An appropriately set-up special needs trust allows your beneficiary to receive goods and services without endangering their Medicaid and other benefits.

  • Cons of a Special Needs Trust 

    Proceeds cannot be given as cash. The trustee can spend assets on goods and services that help the beneficiary, such as paying for personal care assistance and out-of-pocket medical expenses.

Irrevocable Trusts

An irrevocable trust cannot be amended or modified. Once it’s done, it’s essentially set in stone. However, this rigidity can be advantageous, especially for planning educational or long-term care expenses. An irrevocable education trust, for instance, can fund a beneficiary’s education while ensuring funds are only used for tuition and other educational expenses to prevent improper allocation or misuse.

An irrevocable trust can also help protect assets should you need long-term care. In such cases, you could transfer your assets into a trust, allowing a trustee to pay for expenses through the trust. This also prevents your assets from being subject to probate and estate taxes and keeps them separate from qualifying assets for Medicaid consideration.

  • Pros of Irrevocable Trusts 

    Overseen by a trustee. You can appoint an independent trustee to ensure your assets are distributed the way you intended.Protection from creditors. When you create an irrevocable trust, you transfer ownership of the assets in the trust. You no longer own the assets, so they usually can’t be seized by creditors.

  • Cons of Irrevocable Trusts 

    Once it’s done, it’s done. These are fairly ironclad, so you need to be sure that this is the right move for you and your assets.

Your Trust Advisors

Your Trust Advisors

Given the complexity of trusts and estate planning, it is critical to work with advisors who are familiar with the types of trusts that will best suit your needs. An estate planning attorney and accountant are essential members of your team, as is the financial institution holding your trust.

For a knowledgeable team that provides unparalleled service through a reputable financial institution, consider consulting Arthur State Bank’s expert Trust Advisors. They will meet with you wherever you need assistance and coordinate with other members of your estate planning team to ensure your plans meet you and your beneficiaries’ needs. Contact your local trust advisor for an appointment to learn more about how we can help you optimize your funds for the future.

Request Mortgage Information

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Man doing his banking online is the only source for free credit reports authorized by the federal government. Every 12 months, you can get a free copy of your credit report from each agency.

Your credit report has your credit history for all of your credit accounts as well as any credit inquiries and public record court information such as collections. In addition, the report provides personally identifiable information such as your name, address, and employment.

Be sure to carefully review all three reports to identify any problem areas that you may need to clean up prior to applying for a mortgage. If there is any incorrect information, follow the reporting agency’s rules to correct it or add a notation to the report to explain the situation.

Your FICO Score is a score combines data from several areas include payment history, the amount owed, length of credit history, new accounts. Many lenders use this score as a guide. This score is not provided as part of the free annual credit report.

Learn more about how your credit score impacts your ability to secure a loan.


Couple looking over finances

Primary considerations for setting your housing budget require an assessment of your income, debt and current savings for the down payment on the home. The following are generally recommended guidelines; however, you should meet with an Arthur State Bank lender to get personalized mortgage information.


Couple meeting with lender

The pre-qualification/pre-approval letter is included with any offer you make on a house to inform the seller that you have met with a mortgage lender and you are prepared to make an offer. The letter states that based on certain assumptions, the bank is prepared to lend you up to a specified amount of money for a home mortgage.

When choosing a loan officer, we recommend going local to work with someone who understands your community’s real estate market. This blog on first-time home purchases includes questions to ask your lender that may be helpful when preparing for your meeting.

Helpful Resources:


Realtor shaking hands with a client

When a house is sold, the seller typically pays real estate commission to both the listing agent and the selling agent. It is extremely beneficial for the buyer to use their own real estate agent. Loan officers can often recommend selling agents in the area; ask your officer about realtor referrals when discussing your loan.

A good realtor will know the local market and can help you find an ideal home based on your budget, location and desired features. During your search, understand that you will most likely need to compromise on some items, so it’s important to identify your critical needs versus your wants.


Couple searching online for a home

Additionally, when you start with the house search and work backwards, homes can often go off the market while you’re completing steps 1-4. While browsing homes immediately can be tempting, we recommend following these steps in order so that, once you find your dream home, you’ll be well-positioned to take action immediately.

When you find the home you want and you think you are ready to put an offer on it, you will want to make sure you have all the information you need to make a solid offer.

  • Evaluate the neighborhood.
  • Drive by the house at different times of the day.
  • Examine how other houses in the neighborhood are maintained.
  • Consider any potential traffic or other disruptive noise.
  • Is there ample parking for you and visitors?
  • Read the details in any Homeowner Association agreements (HOA fees and rules).

Make sure to do a preliminary check of house details:

  • Check the water:
  • Does it have good pressure?
  • How long does it take to get the water hot?
  • Is it well water or city water?
  • Turn light switches on and off.
  • Open and close doors and windows to make sure they work properly.
  • Review previous utility bill expenses.
  • Consider the property tax bill.


Family meeting with realtor at new house

When writing an offer contract, be sure to pay attention to all of the details.

Offer Price:

Your agent should do a market analysis that pulls data on recently sold comparable houses. The best comparisons will come from the same neighborhood.

If you are asking for the seller to pay some of the closing costs, remember that this cost plus the sales commission determines the net amount you are offering the seller for the house.

Work with your agent on your negotiation strategy. There are many things to consider, such as how badly you want this particular house, whether it is a buyer’s or seller’s market and an assessment of the seller’s motivation to get the property sold.

There isn’t one best strategy.

Be sure to document in writing everything you want included with the house, such as appliances, etc. Your agent should guide you through the contract step-by-step.


  • Home inspection.
  • Mortgage.
  • Final walk through (24 hours prior to closing).

Proposed closing date. Typically, this is 30-45 days from an accepted offer.

A good-faith deposit is required for the offer. This is typically between 1-10% of the purchase price of the house. The deposit is kept in escrow until closing and the money is applied to the purchase price of the house at closing. If the house does not close due to one of the contingency clauses, the buyer receives their money back. However, if the buyer decides not to close on the property, the seller may get the deposit money.

Attach your pre-approval letter to the offer.


Two people in professional meeting

The clock starts ticking for everything documented in the contract, including mortgage application, inspections and closing date.


Woman advising other woman on mortgage application

You will need to decide which mortgage to select prior to the application.

Plan for the following potential fees:

  • Application fee (many banks and mortgage companies charge an application fee; however, there is not an application fee at Arthur State Bank).
  • Credit check.
  • Appraisal (may be paid at closing).
  • Loan origination fee (paid at closing).

Once you have approval for your loan, make sure you don’t change anything that will impact the status of your mortgage. Banks do a final check on credit and jobs just prior to closing, so now is not the time to change jobs or make another purchase on credit such as a car or furniture.


Home inspector going over findings with home owner

Depending on the size of the house, an inspection can cost on average between $300 to $1000.

Many real estate contracts specify how problems uncovered in the inspection will be resolved, up to a certain dollar amount. Should necessary repairs exceed that amount, the buyer has the option to cancel the contract without penalty and receive their deposit money back. Another option is for the buyer and seller to renegotiate who will pay for additional repairs.


Woman happily holding keys to her new home
  • Homeowner’s insurance is required by the lender prior to closing on the loan.
  • Turn on utilities in your name, effective the closing date.
  • Change your address with the U.S. Postal Service.
  • Make moving arrangements.

Three days prior to closing:

  • You should receive your final Closing Disclosure from the closing agency. The final Closing Disclosure shows a column for the seller and a column for the buyer. All closing charges and credits for both the seller and the buyer are documented in the closing statement.
  • Review the closing statement for accuracy prior to coming to closing.
  • The final amount in the buyer’s column shows you the amount of money you need to pay at closing.

The closing office will provide specific payment instructions. Closing funds have become recent targets for cybercriminals. If you are asked to use a wire transfer, call the office and ask to speak to someone you have been working with to double-check the instructions.

Closing day:

In South Carolina, the closing will usually take place at the attorney’s office. Everyone signing for the mortgage must be present to sign the closing paperwork. Make sure you bring the following:

  • Cashier’s check or proof of payment for wire transfer.
  • Driver’s license.
  • Checkbook, just in case there are any additional items that were not on the closing statement.

Be sure to understand this information:

  • How and when you will pay:
  • Your mortgage.
  • Your property taxes.
  • Your homeowner’s insurance.
  • Any HOA dues.
  • Who to call with any questions.

The best practice is to go through the homebuyer’s roadmap in this sequence. However, if you jumped ahead early in your journey, just circle back to address the steps you missed.

Arthur State Bank’s loan officers are closely tapped into local real estate markets and experts at helping clients get what they need on terms that work for them. We also offer mortgage specials for first-time homebuyers.

To start planning your journey to your dream home, try out our mortgage calculator. If you’re ready to talk to a loan officer, contact Arthur State Bank to request personalized mortgage information today. Don’t forget to ask about our first-time homebuyer offer.