For some Detroit residents, the trust may be an essential part of a durable estate plan that results in both tax savings and timely fulfillment of final wishes. Others will find that their needs are better met through other tools of estate planning. Before researching the options of a living trust, special needs trust or other types, benefactors may be best served by understanding some guidelines.
One of the primary reasons for storing assets in a trust is to eliminate the middleman of probate administration which can be costly and time consuming. Due to the cost of establishing a trust, however, it is worth looking at other options for establishing a direct beneficiary that may sidestep probate. Transfer on death and payable on death forms are available in some states for relinquishing property and various accounts directly to beneficiaries. Life insurance policies and retirement accounts, for instance, generally require no court administration.
Another common reason benefactors choose to establish a trust is to protect heirs or the validity of final wishes. A person with special needs may benefit from term disbursement of professionally managed assets versus the receipt of a lump amount. Attachment of conditions to an inheritance is also often best accomplished through a trust.
Beyond tax and probate savings, there are a number of reasons that individuals choose trusts for their estate planning needs. For those who are considering this vehicle for asset management, there are many options available. A charitable trust, for instance, may be used to make donations and establish tax savings for heirs. A spendthrift trust may be used to protect an heir from their own poor money management skills. An experienced attorney may be able to help benefactors best determine their estate planning needs.
Source: Forbes, "Should You Have A Trust?", Erik Carter, September 12, 2014