Is a trust a necessary part of an estate plan?
When most people think of their estate plan, the first thing they think about is drafting a will. Although having a well drafted will is important, in some cases it is only one part of a larger plan designed to help individuals achieve their goals for their estates. Indeed, in some cases, depending on a person’s goals, it may be a good idea to consider setting up a trust.
Reasons for establishing a trust can vary, but some common goals include avoiding estate taxes or probate costs, setting up a vehicle for charitable giving and protecting certain assets to ensure a stream of income for beneficiaries. While many people may consider trusts as something that only the extremely wealthy would consider, in many cases they can be just as useful for the average family.
One of the most commonly used types of trust is called a revocable living trust. Generally speaking, assets held in a revocable living trust do not go through probate, which can help save costs. Individuals can work with an estate planning attorney to draft the terms of the revocable living trust, which can allow for specific directions regarding the ways in which assets can be used during a person’s lifetime and after death. In addition, holding assets in a revocable living trust can help reduce the amount of a person’s taxable estate, which in turn can help save on estate taxes.
An additional benefit of establishing a trust is that it can shelter assets from divorces, bankruptcies and lawsuits. In some cases, too, trusts can help protect beneficiaries who may have special needs or who may not be ready to inherit a large lump sum. Of course, what these protections look like depend a great deal upon the exact terms of the trust.
Overall, trusts can offer a wide variety of benefits to both settlors and beneficiaries, alike. More than anything else, trusts can prove useful because their terms can be modified to meet almost any requirements.
If you are thinking about your estate plan and wondering whether establishing a trust might be right for you, speak to an experienced estate planning attorney. An estate planning attorney can listen to your goals, explain your options and help to develop a plan that meets your needs and those of your family. For more information about how an estate planning attorney can help you, contact a lawyer today.