Do You Need A Trust?

As you progress through your estate planning journey, you may begin to wonder if you need a little something more than a simple will to satisfy your final wishes.

Perhaps you have explicit and detailed instructions on how you’d like a particular asset to be distributed, or you want to set up contingencies to make sure the inherited assets will be used the way you intended. Whatever the case may be, we want to share with you some of greatest benefits of a living trust to help you decide if establishing a trust is the missing piece to your estate puzzle.

You might need a trust if…

  • You need to leave money to minors.
  • You need to leave money to care for someone who is disabled or otherwise incapacitated.
  • You own a lot of real estate, or you own real estate outside your state of residence.
  • You want to leave specific instructions for the distribution of one or all of your assets.
  • Your net worth is equal to or greater than $100,000.
  • You want to reduce any estate or gift taxes that may be assessed.

Leaving Money to Minors

Minors cannot conduct business in their own name, simply put, leaving assets or money to a minor in a will is not the best or most cost-effective means to ensuring they’re cared for and their inheritance is protected.

When you leave money to a minor through a will, the property will go through probate and the court has to step in to oversee the management of the assets until any beneficiary children reach the age of majority; or adulthood, for your state of residence.

Having a trust in place allows you to avoid the court’s expensive asset management fees and carefully outline your wishes for the distribution of an inheritance to minors – to the point that you can choose what age they must be to inherit, even if it’s older than the age of majority in your state.

Leaving Instructions for the Care of Disabled and Incapacitated Dependents

It’s not just minors that require special inheritance assignment, it’s any disabled or incapacitated dependents who cannot oversee and control an asset themselves. For those with special needs beneficiaries, a trust allows you to allocate assets and funding specifically for their care and wellbeing, indefinitely or as long as the funding can support.

Unlike a will which doesn’t really cover specific instructions for maintenance of an asset or what it’s for, a trust gives you control and helps you ensure that your loved ones are well cared for and supported even in your absence.

Handling the Distribution of Individually Owned Real Estate

If you own any property individually, a trust is a great way to either assign it to a beneficiary outright, or keep it in the trust and have it maintained by a property management firm. This is a benefit often utilized by people who wish for property to be rented out and the proceeds added into the trust, or for those that are leaving property to minors and want to make sure it’s managed professionally until they come of age to inherit and take control.

Outlining Specific Instructions & Conditions for Inheritance

Regardless of how large or complex your estate is, you may have specific requests for how it’s distributed. One of most widely recognized benefits of a having a trust is the ability to dictate conditions as well as milestones that precede the distribution of an asset.

A common example of this is allotting a certain amount of money for a beneficiary’s college expenses. By using conditional distribution wording in a trust, you can make sure the money is only released if and when the beneficiary attends college.

Your Net Worth Is $100,000 or More

While you should have a will if you own anything; regardless of how high your net worth is, when you have a net worth of about $100,000 or more, you should really consider setting up a trust. The idea being that at that point, your estate is probably on the complex side and you could benefit from enhanced distribution control.

You’re Worried About Estate and Gift Taxes

If you’re worried about tax consequences on your estate, a trust may be helpful to you. However, not every kind of trust reduces tax burdens. So, if one of your specific concerns is limiting the taxes on distributed assets – make sure you contact an estate attorney and find out what the best options are for meeting your objectives and limiting the tax burden on your estate and beneficiaries.

You Want the Protection and Benefits of a Naming a Successor Trustee

A successor trustee is a person you name to manage and oversee your trust in the event that you can no longer do so. What’s nice about having a living trust is that not only can your successor trustee manage the trust in the event of your death, but they can also easily step in to manage it if you were to become incapacitated – a unique feature that testamentary trusts don’t offer since they only take effect in the event of your death.

Each individual has unique circumstances and desires, and creating a trust is a personal decision with a lot of potential variables and outcomes. Talking with a professional is an opportunity to find out not only what would be best for your particular situation, but also how to proceed and what steps you should take establish your trust most efficiently.

To establish a complex trust, or learn more about various options available, contact an estate attorney today.