When Is a Good Idea to Use a Trust?

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A trust can be useful in various estate planning situations.

More John F. Kennedy assassination-related documents were recently released to the public.

This brings to mind the topics of death and wealth.

Death often takes us and our loved ones by surprise.

Before this happens it is important to have an estate plan in place.

Although many people believe trusts are specifically for wealthy and influential families like the Kennedys, they would be wrong.

According to a recent The Mercury article titled “Planning Ahead: How do you know when you need a trust?,” many circumstances exist where a trust would be beneficial.

Trust planning is not only for the wealthy.
You do not need to be wealthy to utilize a trust.

What are these?

A family members has special needs.

A Special Needs Trust (or a Third-Party Supplemental Needs Trust) can benefit family members who have special needs.

Because many individuals with special needs are eligible for means-tested public assistance, these benefits may be jeopardized by an outright inheritance.

Special Needs planning can be complex (understatement) as some complexity and certainly requires working with an experienced estate planning attorney.

By using a properly prepared, executed, and funded trust, it is possible to provide for a loved one with special needs beyond the support they receive from the government.

Greater management of money is necessary.

Although you have had a lifetime of learning to manage the wealth you have created, your heirs do not have this experience.

Rather than leaving an outright inheritance to unprepared beneficiaries, you can use a trust to help manage the tax liabilities and investment complexities.

A trustee skilled in managing finances, can help your money last longer and avoid common financial mistakes.

Real estate is owned in multiple states.

Some people own a vacation property or simply move between homes depending on the seasons.

If property is owned in multiple states, it can help to place such properties in a trust to simplify management of the real estate, especially when the goal is to keep them in the family.

Responsibilities and rights of beneficiaries can be clearly outlined regarding the real estate.

Tax protection may be helpful.

Certain types of trusts can remove assets from your taxable estate.

This is especially helpful for those with high value property or who reside in states with a state estate tax.

Someone may need to manage funds while you are alive and after you die.

If you anticipate incapacity, whether through a family history of illness or through a recent diagnosis, a revocable living trust provides the ability for you and other trustees to easily manage these assets.

Although they do not remove assets from your taxable estate, revocable living trusts provide greater flexibility and control of assets while you are still alive and competent.

A “pour-over will” is typically used with a revocable living trust to designate assets to be titled to the trust only after you have died.

If any of these situations apply to your family, make an appointment with an experienced estate planning attorney to create a plan to meet your unique needs.

ReferenceThe Mercury (Nov. 23, 2022) “Planning Ahead: How do you know when you need a trust?”

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