Five Really Good Reasons to Have a Trust

By Barbara Coenson
Attorney at Law

‘Do I need a trust?’ is one of the most frequently asked questions by people preparing an estate plan. A trust is a legal entity that holds assets for the benefit of you and your loved ones. Many people believe trusts are for the wealthy, but trusts can offer many advantages to families regardless of their wealth. Here are five really good reasons to have a trust:

1. To Avoid Probate. Do you really want a court-supervised probate proceeding to pass your property to loved ones when you die? Probate can be expensive, time consuming, and can delay the distribution of your property to your loved ones for several months, sometimes even years. Property that is held in trust, however, can pass directly to loved ones without the cost and delay of a probate proceeding and without court involvement.

2.  To Hold Inheritances. Do you really want your children to have their inheritance at age 18? A trust can hold assets even after your death. If you leave a minor child, special needs child, young adult, or irresponsible loved one who spends recklessly, then your trust can hold their inheritance until they reach a certain age or even over the course of their lifetime.

Tom’s trust instructed that upon his death, the assets devised to his son, Jarrod, should pay for Jarrod’s college education, but should not be distributed to Jarrod until he turned 25. In contrast, Peggy, who, at age 18, spent the money she received upon her mother’s death on expensive clothes, a luxury car, and going out to clubs, did not have enough money left to pay for her college education.

3. To Ensure Loved Ones Receive Inheritance. Do you really want to risk that your spouse’s new husband or wife will get your assets after you are gone? A trust can support your spouse for the remainder of his or her life and ensure that your children will receive their inheritance when your spouse dies.

Sam and Ann were married for 22 years. They had one daughter, Leslie. Ann died. Her property went to Sam according to her will. Several years later, Sam married Nancy. Sam and Nancy were married five years when Sam changed his will to give all his property to Nancy.  Sam died. Sam’s new wife, Nancy, received all the property, Leslie received nothing. A trust could have ensured that Leslie would receive Sam’s and Ann’s assets after both died, not Nancy.

4. To Reduce Estate Taxes. Do you really want to give the government part of your children’s inheritance? A trust can help eliminate or reduce the liability of estate taxes upon your death. A trust can double the estate tax exemption for married couples or remove assets from the calculation of your estate’s taxes while still benefiting your family.

5. To Maintain Privacy. Do you really want your private affairs to become public knowledge? If you become incapacitated, assets held in trust can be used for your care without court involvement. Also, notice of your death and the names of your beneficiaries do not need to be published.

So, do you need a trust? It may be well worth considering when establishing your estate plan. Really!

Lake Mary Life Sept/Oct 2011

« Back to Articles of Interest