Each estate plan is as unique as the individual who is putting together their documents. People often talk about their family relationships and the distribution of their assets. They may try to convey something about their personal values to their beneficiaries and/or to the world at large with their estate planning choices.
In recent years, an increasing number of people have decided that integrating a trust into their estate plan is the smartest approach to ensue proper handling of their assets and wishes. Some people find the idea of a trust off-putting and may write off these powerful legal instruments as unnecessary. However, those who add trusts to their estate plan often do so for very specific – and, ultimately, beneficial – reasons.
Imagine a person who wants to put together an estate plan after a divorce. They still have minor children that they share with their ex-spouse, and they do not want the other parent to have control over the children’s inheritance. A trust could help them achieve that goal and preserve assets for when their children become adults. Trusts can also be useful in cases where a beneficiary is an adult and already married, and the testator worries that their spouse may try to lay claim to inherited assets if they ever decide to divorce. Those who want to protect someone’s inheritance from misuse by others may find that a trust is a useful tool.
In some cases, someone entitled to receive an inheritance might not be in the right situation to come into possession of a large amount of money at once. Some people have issues with addiction that might put them at risk if they had access to a large inheritance. There are others with debilitating medical conditions who couldn’t manage such resources without support. Even those with a bad habit of mismanaging money might benefit from having a trustee administer their inheritance and preserve it for them. Those who worry that their loved ones would be overwhelmed by receiving everything at once or that they might misuse an inheritance may find that a trust is a good solution.
In some cases, trusts can be a useful tool for those who want to protect themselves later in life. Typically, a trust will include a provision that prioritizes the needs and care of the person who created the trust over the wishes of the eventual beneficiary. If a person who created a trust (also known as the Grantor, Trustor or Settlor) becomes incapacitated, the person serving as the Trustee is obligated to abide by the terms of the trust and ensure that the Grantor’s needs are met for the remainder of his or her lifetime.
Learning more about the purpose and impact of a trust can help people decide whether creating and funding a trust is the right move for their needs and goals. An experienced estate planning attorney can answer your questions.