Trusts Aren’t Just for Rich People
The other day a client called me because one of his close family members just passed away. Since the family member owned real estate outright in her name individually, I explained that they would have to start the probate process to get the house out of her estate.
Realizing the frustration of now having to deal with probate, the client then asked, “should I get a trust to avoid probate for my family? I thought trusts were just for rich people.”
This is a common occurrence that often only comes to light after the death of a close relative, so I’m hoping this article sheds some light and can help someone else avoid the scenario that many of my clients are now experiencing first hand.
So who needs a trust?
There are three common scenarios where you would want a trust in place for your family.
If you own real estate. As mentioned above, real estate is the most common reason for a family having to deal with probate. So if you want to avoid the hassle, frustration, delays, and legal fees, then all you need to do is set up a simple revocable trust to keep the property out of the court upon a family member’s death.
If you want to minimize estate taxes. This is where people think trusts require you to be rich - it’s not. If you are married and own property in Massachusetts and have a taxable estate greater than $1 million then a credit shelter trust can save your family tens of thousands of dollars from estate taxes. Many people may be surprised to learn that they are a millionaire on paper because of the recent surge in home prices. Life insurance tends to also push people over the threshold (although a modest home and retirement account tend to be the two biggest factors). To be clear, life insurance is not taxable for income tax purposes, but it is countable for estate tax purposes.
If you have minor children. In Massachusetts, if you want to protect your children’s inheritance beyond age 21, then a simple trust can allow someone to manage that money for their benefit until they reach an age that you think is appropriate.
As the above three reasons show, trusts aren’t just for the rich - in fact, trusts are becoming just as popular for the average family as Wills once were now that more and more people are experiencing the nightmare of probate first hand (and Covid did not help the backlog of the court system).
Want to learn more about whether a trust makes sense for your family? Give me a call at 781 202 6368, email me at Jlento@PerennialTrust.com, or schedule an appointment online by visiting www.perennialestateplanning.com.
I’m always happy to help,
Joseph M. Lento, J.D.
Your Local Estate Planning Attorney
Perennial Estate Planning
477 Main Street
Stoneham, MA 02180
