Most Minnesota residents can see the logic in having a will. However, a will is only one part of estate planning. Many individuals may need trusts in order to ensure inheritances are protected on behalf of heirs and beneficiaries.
For instance, parents of adult children that have special needs may actually cause more financial problems for that child if the children inherit outright. A special needs trust can be set up to protect the child’s inheritance while leaving them the ability to receive any and all benefits available to him or her. Moreover, a special needs child may not have the ability to manage an inheritance properly.
The same can be said of minors. Minor children cannot directly manage their inheritance. That job is left to a trustee or guardian appointed for the benefit of any minor children. Putting the inheritance of a minor in a trust could ensure it is protected on behalf of the child.
Another added benefit of trusts is that the assets in them do not have to go through probate. For this reason, many people opt to have a revocable living trust. Not all assets have to be in a trust to avoid probate. Beneficiary designations on assets such as life insurance policies and retirement accounts are handled outside of the will and the probate process. Still other accounts may be set up so that they pass directly to the other account holder in the event of death.
There are many ways to safeguard an inheritance. Trusts provide protection for a multitude of assets that would otherwise have to pass through probate. Minnesota residents may be under the impression that trusts are only for rich people, but as illustrated here, that is not necessarily the case. There are many circumstances where beneficiaries and heirs can benefit from their inheritance going into a trust instead of passing directly to them through a will.
Source: Forbes, How To Inherit Wealth Without Screwing Up, Larry Light, Nov. 22, 2013