I often craft estate plans without the use of a trust and achieve the exact same outcomes as if one was in place. Trusts in some circumstances are an added expense, unnecessary and over the top.
My firm believes putting folks in a trust only if, it’s perfectly appropriate or absolutely needed. Whether a trust is appropriate or necessary depends on you and your families circumstances. Below is a list, à la Jeff Foxworthy, to see if a trust is a good fit for your estate plan.
You might need a trust if…
… the value of your estate is approaching the $23 million married couple threshold for estate taxes. ($11.5M for individuals)
…you have kids (minors or adults) who are dependent on you.
…you can’t use probate avoidance strategies such as, beneficiary deeds for your home; titling of assets; beneficiary designations, transfer-on-death, or payable-on-death designations for your financial accounts.
…you can not use a power of attorney to manage your financial affairs.
…you own real estate in more than one state.
…your family is blended.
…your have special needs, gambling or addiction issues in your family.
…you have time to update, maintain, and manage a trust on a continuous basis. (at least yearly)
Keep in mind, this list is not all inclusive. There might be some other reason for a trust depending on your specific circumstances.
No Need To Supersize
In the end, when it comes to estate planning, there’s no reason to get more than what’s necessary. Estate planning and tax laws changed considerably in the past few decades. Colorado did away with estate taxes in 2005. Also, the federal estate tax threshold doesn’t apply to almost all of us. Moving forward, when speaking with your estate planning attorney, I advise you to keep an open mind when discussing trusts. Remember, estate laws have changed and more estate planning tools are available today than in the past. A carefully crafted estate plan can avoid the nuisance and expense of a trust.
This article is for educational purposes only, and does not constitute legal advice about your case or situation. There may be exceptions to the information outlined above. Please consult an attorney if you have specific questions about your business or estate plan.