Why Would I Consider Trust For My Estate Planning In 2023?

In 2023, and after living through the pandemic, everyone needs an estate plan, it doesn’t matter what your socio-economic circumstances are.

A simple estate plan will typically contain at least three documents. This will generally include a durable medical power of attorney and a durable financial power of attorney. The other document typically found is a way to pass your property upon death such as a will.

However, there are times when a trust might be an option in your estate planning instead of or in addition to a will. So why should you consider a trust? Trusts are useful estate planning tools that can accomplish a variety of goals. They can help avoid probate, minimize taxes, and be used to give property to minor or disabled loved ones. Trusts can be created during a person’s lifetime (Living Trusts) or at the person’s death (Testamentary Trusts). Some different types of Trusts from both categories are discussed below.

Living Trust

A person can transfer their assets to a Living Trust and, as trustee, continue using their assets as they always have.

Tax Planning Trusts

Several different types of Living Trusts provide flexible alternatives for minimizing capital gains and es- tate taxes, including the Charitable Remainder Trust, Irrevocable Life Insurance Trust, Qualified Personal Residence Trust, Grantor Retained Annuity Trust,and Grantor Retained Unitrust.

Testamentary Trusts

A person can create a Trust under a Will, called a Testamentary Trust, which does not take effect until they are deceased.

Disability Trusts (also known as Special Needs Trusts)

A Disability Trust is a type of Living Trust that allows a disabled person under the age of 65 to use her own assets for her special needs, other than food and shelter, and keep public benefits, such as Medicaid and Supplemental Security Income (SSI).

3 reasons you may need a trust as part of your estate plan n Are you concerned about protecting a gift from creditors or litigation? n Does a loved one need nursing home care or Medicaid eligibility? n Do you want to provide for children, grandchildren or charitable organizations?

The types of assets you own is another important consideration. Here are three typical reasons you might need a trust.

1A loved one cannot be trusted with a large gift or has special needs

If you have concerns that a child does not have the financial skills to manage a gift or the loved one receives government benefits.

2 You want to transfer complex assets in a thoughtful manner

Trusts can be effective for keeping a vacation home or a closely-held business in the family. For large charitable donations, a trust allows you to leave a vision for how you would like the gift used.

3 Limiting the potential for relationship-damaging fights is important