Often times people know someone who have a trust and so they think they need one too. Not every estate plan needs to have a trust. Every family has different circumstances, so just because your friend has a trust doesn’t necessarily mean that you need a trust.
There are some benefits of having a trust in addition to a will. Assets held in trust avoid probate. However, a trust is not the only way to avoid probate. Proper beneficiary designations on all assets can also avoid probate. Therefore, if you’re only creating a trust because you think you need one to avoid probate, you might reconsider.
However, if you want to control your money after you’re gone, a trust is the easiest way to do so. If you don’t want your child to receive a big inheritance all at once, a trust can be set up to distribute the inheritance over time, at ages that you decide. You might choose to leave a certain amount upon the child’ s graduation from college, and then give a certain percentage of the inheritance when they are 25, or 30, or whatever age you feel appropriate. If there are drug or alcohol abuse issues, a trust can help control how money is spent for a beneficiary. A trust may help protect assets from a divorce. If you have a child with special needs, a trust is a good tool to provide for your child.
If you have young children a trust can help provide for them and can avoid probate for a conservatorship. A minor can’t just be given all the assets, so by creating a trust, a trustee will be able to distribute money for the child until they are old enough to handle the money themselves.
It generally costs more to set up a trust. If your circumstances warrant having a trust the extra cost shouldn’t deter you. However, if there isn’t as much of a reason to control the assets, and you properly title all assets with beneficiaries, the cost maybe an unnecessary expense.
It is a good idea to speak with an attorney who can ask questions about your family circumstances to help you determine whether or not a trust would be needed to meet your needs and wishes. They will be able to help you understand the pros and cons of implementing different estate planning tools.