Individuals in many different personal circumstances may need to add a trust to their estate plans. Those who have family members with special needs or a history of substance abuse may recognize that they need to take special steps to leave resources for those people. Other times, a trust may be necessary to reduce estate tax liabilities or help ensure that someone can qualify for Medicaid if they need support later in life.
One of the happier reasons that an individual might need to consider adding a trust to their estate plan involves remarrying. When someone who has children marries a new partner, the blended family they create will have some unique needs for estate planning purposes. When someone makes a commitment to their spouse, they will want to provide them with certain support and perhaps a specific standard of living, but not necessarily at the expense of their children. Trusts are a viable means of providing both for children and new spouses in a blended family.
Why trusts are so useful
If someone were to use a will to transfer property when they die, they would typically need to choose between leaving specific assets to their children and leaving them to their spouse. If they wanted their spouse to continue living in their marital home, that might mean that their new spouse would inherit the house, which could represent the majority of their estate. They could refinance the home or sell it off before they die, or they might leave it to their family members in their estate plan.
Holding the house in a trust would allow a surviving spouse to live at the property for the rest of their life without necessarily giving them total control over it. They would not be able to refinance or sell the property because the ownership interest will pass to the testator’s children when the surviving spouse eventually dies. Such a scenario would allow for the comfort and protection of a spouse without disinheriting the children in the family.
Another reason that trusts are such a smart choice for those with a blended family is that they are harder to challenge in probate court. An estate plan will typically require revisions when someone remarries anyway, so it may also be a good time to reconsider the way someone structured their plan, not just the beneficiaries they named.
Adding trusts to estate plans with the assistance of a legal professional can be a smart move for those who are planning to remarry and other individuals who are navigating a host of unique personal circumstances.