The more thorough you are with your estate plan, the easier it is for your assets to pass to the right parties in accordance with your desired legacy. For many people, a last will seems at first like the only thing they may need in an estate plan.
As they grow older, people often decide to include health care directives or power of attorney documents to protect them as they continue to age. Not enough people consider the many benefits of creating and funding a trust as part of a comprehensive estate plan.
If your family has any of the following situations, you might be a prime candidate for integrating a trust into your estate plan.
You want to leave money to a charity, create a park or fund a scholarship
Wanting to use charitable contributions as a means of establishing your legacy is certainly noble, but it is an intention all too often undermined by beneficiaries and heirs who don’t want to share their inheritance with a business or nonprofit entity. Creating a trust is one way to earmark certain assets for charity while reducing the risk of others challenging that decision.
Did you have a family member with special needs or other issues?
If you have a child, grandchild or possibly even a sibling with special needs that you want to care for even after you die, creating a special needs trust can help you take care of them without limiting their access to critical federal support systems like Medicaid.
You might also find that a trust will benefit your family if one of your heirs has a history of drug abuse, compulsive spending or gambling problems. The trusts can serve as a critical stopgap between that individual and the assets you would want to leave for them.
You have enough assets to worry about taxes or Medicaid qualification
Those with multimillion-dollar states can use a trust to diminish the value of their estate and avoid estate taxes on what they leave behind. A trust can also serve as a way to diminish your assets so that you can qualify for Medicaid when you get older. That trust will also protect your assets from claims by creditors, including federal insurance programs, after you die.
These are just a few examples of circumstances where trusts can help a family. They can also be beneficial for the protection of minor children or even for protecting your wishes if you have a blended family or hold complex or unusual assets.