Do I need a trust?

On Behalf of | Aug 17, 2022 | Estate Planning |

When you’re doing your estate planning, you may find yourself wondering if you need to include a trust. This is a different type of financial tool than just using a will. It allows you to create a separate trust that you fund with assets from your estate.

You can do a lot of different things with trusts and they’re incredibly flexible. To decide if you need one or not, let’s consider some of the benefits.

They give you more control

First and foremost, using a trust gives you more control over what happens to your money. If you just leave someone a certain amount of money in the will, they get it as soon as you pass away and the estate administrator cuts them a check. But if you’re worried that they are too young or that they’re going to waste the money, you could put it in a trust that specifies how you want the money to be used.

You can spend down your assets

Another reason to consider a trust is if you’re trying to reduce the tax burden on your estate. Maybe you need to spend your assets down to get below a certain threshold. People will also do this if they’re attempting to qualify for certain types of benefits and there’s a financial component. You may not qualify until you put money in the trust, because this means that the trust owns the money, not you.

You can reduce an heir’s assets

Similarly, perhaps you have an heir who is going to need government benefits because they have special needs. You’re caring for this person now, but you’re worried about what will happen to them in the future. If you leave them too much money directly, they may not qualify for benefits any longer. This means that all of the money will have to be spent first. If you put it in a trust instead, you can still direct the trust to help them in certain ways, but you don’t increase the assets owned by your heir. This means they can also still get their benefits.

These are just three different ways that you can use a trust, but they help to show how valuable and flexible they are. If you’d like to set one up, you just need to know what steps to take.


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