For certain individuals, trusts can be an advantageous and inimitable estate-planning tool, authorities say. People who have estates worth more than $100,000 and possess complex real estate holdings, art collections or business holdings may find a trust to be very beneficial. Others worth at least $100,000 who have a disabled relative whose needs they wish to ensure even after they themselves pass away may also wish to set up a trust, which will avoid negatively impacting their relative's eligibility for continued disability and health care benefits from the government.
People who want to make certain that their intended beneficiaries will inherit their estates following the death of their spouse may also want to set up a trust, authorities say. Trusts allow people to stagger their intended beneficiaries inheritance conditioned on attaining certain milestones. For example, some people set up trusts indicating a portion is payable upon the beneficiary finishing college or reaching a certain age.
People who wish to avoid the probate process and associated probate fees may also want to consider setting up a trust, authorities say. An irrevocable trust, or one that may not be changed, might be selected for the portion of any estate that would be otherwise subjected to estate taxes.
People choose to set up trusts in order to meet a variety of goals. There are a number of options, including generation-skipping trusts and qualified personal residence trusts. Although a trust is often not needed for simple estates, trusts may be essential as part of the overall estate plan for people with high-value assets. Exploring the idea of a trust with an estate planning attorney may help individuals make an informed decision fit for their particular circumstance.
Source: CNN Money, "Estate planning: Is a trust beneficial?", November 23, 2014