Do I need a Trust?

/ April 9, 2013

TrustI field this question every day.  My response is always the same, it depends.  So, when should someone consider a Trust-based estate plan*?  Well, here are a few things to consider:

  1. Do you own property in another state? If so, a trust may be a good way to prevent the need for multiple probate proceedings.
  2. Are you concerned about the fact that probate is a public and sometimes expensive process? If the answer is yes, then you may want a trust to help avoid the probate process.
  3. Do you want a professional fiduciary to assist with the management of your assets if you become incapacitated?  If so, then a trust could be an important part of your incapacity plan.
  4. Is there a possibility that someone might contest your will?  If so, then you may consider establishing a trust to increase privacy and limit the opportunites for a lawsuit.

Of course, this list is NOT exhaustive and there are other reasons to recommend a revocable trust. Conversely, there are many situations where a revocable trust is unnecessary, or maybe even a bad idea. It all depends upon a clients individual situation: the client’s goals, the fiduciaries named in an estate plan, the intended beneficiaries, and the type of assets owned by the client. For a more in depth analysis of whether a trust is right for you, read this article by Jayne Sykora.  You should also consider calling your legal advisor to discuss the pros and cons to having a revocable trust.

*Trust-based estate plan in this article means a revocable trust (also known as a revocable living trust) with a pour-over will.

One thought on “Do I need a Trust?

  1. Another reason for considering a trust as part of — or the basis of — an estate plan is the existence of an heir who is disabled. A trust can be used to take care of a disabled child or grandchild, for example, who will need care or assistance throughout life. Or perhaps the proposed heir is simply unable to manage assets on his or her own. It may be possible to provide for the heir in a testamentary trust, but given the vast array of issues that can arise with respect to trusts, a revocable living trust may well be the best solution in such circumstances.

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