Why You (Might) Need a Trust
One of the most common questions I get on the topic of estate planning is “Do I need a trust?”
When I talk about a trust here, I am talking about a standard Revocable Living Trust. I am not talking about the more complicated irrevocable trusts. One of the main purposes of an irrevocable trust is to avoid estate taxes. With the federal exemption currently over $11 million per person, this is not as big a concern as it used to be.
Therefore, the most common purpose of a living trust is to create simplicity and privacy for the beneficiaries and in some cases, to have control over how and when the assets your beneficiaries inherit can be used.
Source: LegalZoom
Common Q&A
(1) Can I change it? Similar to a will, it can be amended in the future as your wishes change.
(2) Is it expensive? Depending on complexity, costs can range from a few hundred dollars online to a few thousand for an attorney. Typically this is done in conjunction with updating other estate planning documents. In addition, you are usually trading an expense today for an expense in the future. If you don’t create a trust, there is a good likelihood that your beneficiaries will have additional costs when settling your estate.
(3) Does it replace a will? No. A will is a separate estate planning document. In a lot of cases most of the assets will be governed by the trust document and then you will have what is called a “pour over will” to catch any assets not assigned to the trust.
If you would like to review the other 4 key estate planning documents, you can use the links below.
Thank you for reading,
Alex
This blog post is not advice. Please read disclaimers.