You Probably Don't Need a Trust

A trust is a legal tool that allows individuals to protect and manage their assets while alive and after their death. It is commonly used to transfer wealth to future generations or to protect assets from creditors. However, despite its many advantages, most people don't need a trust.

Here are some reasons why:

1. Most people don't have enough assets to warrant a trust.

Trusts are often associated with wealthy families and large estates. However, for most people, a simple will and other estate planning documents are sufficient to distribute their assets to their heirs. A trust can be expensive to set up and maintain, and the cost may outweigh the benefits for smaller estates.

1. A trust may not be necessary to avoid probate.

One of the main reasons people create trusts is to avoid probate, which is the court-supervised process of distributing a deceased person's assets. However, in many states, probate is a relatively simple and straightforward process that does not require a trust. Furthermore, there are other ways to avoid probate, such as joint ownership or beneficiary designations.

1. Trusts can be complicated and require ongoing management.

Creating a trust involves transferring assets to the trust, which can be a complicated and time-consuming process. Additionally, trusts require ongoing management and maintenance, such as paying taxes, managing investments, and distributing assets to beneficiaries. For many people, the complexity of managing a trust outweighs the benefits.

1. Trusts may not offer as much asset protection as people think.

While trusts can offer some protection against creditors and lawsuits, they are not foolproof. In some cases, a court may order the assets in a trust to be used to satisfy a judgment against the trust's creator. Furthermore, certain types of assets, such as retirement accounts and homesteads, may be protected by law without the need for a trust.

1. Estate planning can be accomplished with other documents.

For most people, a simple will, power of attorney, and healthcare directive are sufficient to accomplish their estate planning goals. These documents can ensure that their assets are distributed according to their wishes and that their affairs are managed in the event of incapacity. For some people, a trust may be an additional tool, but it is not always necessary.

While trusts can be a useful estate planning tool for some people, most people don't need a trust. A simple will and other estate planning documents are usually sufficient to accomplish their goals. Before creating a trust, it's important to consider the costs, complexity, and potential benefits to determine whether it's the right choice for your situation. Consulting with a qualified estate planning attorney can help you make an informed decision.

Wealth America contributed to this article, and they're sponsors of Tidings Media.  Visit www.WealthAmerica.Net to see their low cost insurance and retirement options.