When might people add trusts to their estate plans?
For many people, simplicity is their main objective during the estate planning process. Many testators aspire to achieve as much as possible with the fewest documents. However, there are certain goals people cannot achieve with a simple will.
More involved documents, such as trusts, are necessary in certain situations. When might a testator need to consider adding a trust to their estate plan?
When they want more control
One of the simplest reasons to add a trust to an estate plan is to retain direct control over one’s property even after death. Perhaps someone has a blended family and worries that their children will fight with their spouse. A trust can help them reduce the likelihood of major conflict over their estate. Those with businesses or real property may also want to use a trust to preserve those valuable assets.
When their family faces special challenges
It is often personal circumstances rather than legacy wishes that will inspire the creation of a trust. Maybe someone has a child with a substance abuse disorder. A trust could preserve assets to help support that vulnerable loved one without contributing toward their addiction. Trusts can also be useful for those who have a special needs family member and those concerned that a beneficiary of their estate may divorce and lose their inheritance that way.
When they want to avoid certain risks
Finally, many people add trusts to their estate plans specifically because they worry about creditors making claims against their estates or Medicaid recovery efforts. They may also want to feel confident about applying for Medicaid should they require benefits as they age. Others will create a trust to minimize the chance of estate taxes after they die.
Recognizing when a trust is particularly valuable may benefit those thinking about their future or their legacy.