Making Bloomsburg A Better Place To Live And Age

Do I need a trust?

On Behalf of | Jan 31, 2024 | Firm News

There are many different kinds of estate planning documents that people may draft. Most people are familiar with wills. Some people decide to add advance directives and powers of attorney to their estate plans in case they have medical challenges later in life.

There are also some people who use specialized trusts to protect their loved ones and transfer their property to specific beneficiaries. People often think of trusts as tools for the extremely wealthy, but they can be useful for people in many different scenarios.

When might someone benefit from adding a trust to their estate plan?

When they have a very large estate

Someone with significant personal assets must address the possibility that their family members might fight over what they leave behind when they die. A trust can be harder to challenge and may deter frivolous lawsuits brought against someone’s state. Trusts can also benefit those with multi-million-dollar estates by protecting their legacies from the negative impact estate taxes could have.

When someone worries about debt or long-term care

Individuals who believe their estates could be at risk of collection efforts after they die may want to create trusts. The assets in a trust can bypass probate court and may therefore have protection from creditor claims in many cases. Trusts can also be useful if people worry that they may require long-term care support and may eventually need to apply for Medicaid. A trust can both make qualifying easier and decrease the likelihood of penalties imposed due to financial transactions.

When their beneficiaries face challenges

There are many concerns about beneficiaries that might require a more careful approach to estate planning. Perhaps they have substance abuse issues or special needs. Maybe they are in an unhealthy marriage and the testator wants to protect them from the loss of inherited property if they ever divorce. Trusts can help prevent issues in a broad range of different family situations.

When they have specific legacy wishes

Perhaps someone wants to leave money to a charitable cause, create a scholarship fund or transfer property to local authorities for the creation of a public park. Maybe they own a business and want it to become the shared property of the employees. Some people have long-term plans for their assets after their passing, and a trust can be the easiest way to achieve those goals. Trusts do not just transfer assets to people the way that wills do but can require that recipients meet certain standards to access or use trust resources.

Those planning complicated legacies may benefit from adding more complex documents to their estate plans. Recognizing when a trust could be beneficial may help people create estate planning documents that effectively address their unique concerns.

Archives