Who should consider creating a trust?

Virtually anyone with assets could benefit from creating a trust, but here are four scenarios that I help clients with on a daily basis.

#1 YOUNG FAMILIES

If you are a parent with minor children, then a trust can be used to protect your children’s inheritance.

Without a trust, your family would have to deal with months (sometimes years) of paperwork, legal fees, and headaches. Just as important, without a trust your children would receive all the money outright at age 18 or 21 depending on where you live. 

But with a trust, you can make sure your hard earned assets and any life insurance proceeds are protected for the benefit of your minor children until the age you think is appropriate for them to receive the money outright. In the meantime, you can appoint a successor trustee (someone you trust, like a parent or sibling) to manage the money for their health, education, and support until they reach financial maturity.

#2 PROPERTY OWNERS

If you own real estate, then you want a trust. It’s that simple.

Not only will a Trust help your real estate avoid probate court, but it can also instruct your family and the trustee in terms of how the real estate should be managed and/or sold upon your death. 

You can lay out the terms of right of first refusal or first option to purchase and by doing so avoid family conflict, which is almost inevitable when it comes to family and real estate. In fact, if I had to guess the most common source of conflict when it comes to estate planning, its families that didn’t plan or give instruction for the orderly management and distribution of their real estate.

So, if you own properties, you definitely want a trust.

#3 WEALTHY CLIENTS

It turns out that nobody like paying taxes. And this is especially the case with wealthy clients who have worked for decades to accumulate and compound their investments, only to realize that is not about what you make - it’s about what you keep.

So, if you don’t like paying taxes, then a trust may be able to help you and your family pay as little as possible when the time comes. 

For example, married couples may do split trusts to maximize their exemption in certain situations. And other clients can use grantor or non-grantor trusts to minimize their income tax burden, depending on their family’s circumstances.

#4 FAMILIES WITH SPECIAL NEEDS CHILDREN

Parents who have children with special needs are often concerned about the best way to leave money to that child because of the implications of doing so. This could be because either (1) the child is unable to manage the money themselves or (2) because (even if that child can manage money just fine) it may impact the government benefits the child is currently receiving or may be receiving in the future.

And this goes beyond parents with children who have special needs. Grandparents, aunts, and uncles often call me asking a similar question because they have a grandchild, niece, or nephew who they would like to assist, but are unaware of the best approach to do so. 

To make matters more complicated, the beneficiary may be too young to determine whether or not they would ultimately need government assistance at all - as is often the case when a young child has been diagnosed with autism.

So, if your child is receiving government benefits, or you think your child may be receiving government benefits, then the most common solution would be to establish a special needs trust in order to supplement, but not supplant those benefits.

If you have a family concern that involves the management and distribution of assets, then a trust is almost always the best solution, but the type of trust can vary depending on your concerns and goals.

If you’d like me to review your trust or help you create one for your family, then I’d be more than happy to help. Just click the link below to schedule a call.

Thank you, and I look forward to working with you!