Trusts are something that many people never even consider when making their estate plans. They assume only rich people use them. They are, however, something anyone might find helpful.
Trusts are becoming much more popular for estate planning, even among those with modest means. Here’s why:
A trust can ensure you still have assets to pass on when you die
By moving assets into a trust, those assets are no longer part of your estate. Doing it early enough can help you reduce the value of your estate so that you qualify for Medicaid. (They operate a look-back period where they can claim assets moved out of your estate a few years before you need to use their services.) Otherwise, Medicaid may take your assets to pay for any medical attention you need, and that could leave nothing for you to pass on.
Assets in the right type of trust can also be protected from claims by creditors while you are alive or when you die. Again, this allows you to ensure you have as much left to pass to your family as possible.
A trust can protect people from poor spending
Maybe you wish to leave most of your wealth to your only child, but they have an addiction to gambling or drugs. You worry they may just blow anything you leave them on those vices. If you place your assets in a trust, you can prevent this by placing rules around the distribution of the trust. Perhaps they only receive $1,000 a month, or maybe they won’t receive anything until they successfully attend rehabilitation.
Learning more about how a trust can protect your wealth allows you to decide if you need one.