Estate Planning Myth #9: Trusts? Trusts are for billionaires

Sure, billionaires may have trusts for charitable gifting, inter-generational wealth transfer, and asset protection purposes, but for many families, trusts assist in more mundane circumstances, too. They can be useful tools for managing judicial awards or settlements from law suits. Leaving all assets outright to 18 year olds – even if these assets are not in the millions of dollars – may amount to a lot more money than an18 year old is able to handle appropriately. Leaving assets in trust can be a lesson in asset management and can protect both the assets from the heir and the heir from himself at the same time. Trusts also provide a layer of protection from creditors. Another reason parents choose to leave assets in trust is their children’s partners: assets in trust may be protected from divorcing spouses. Additionally, trusts may be set up to teach values like assets management but can also be designed to set the stage for habits of philanthropy. Trusts can also be useful for incapacity planning.