To most people, a trust is something used by the very wealthy or possibly very famous people to protect themselves and guard their privacy. However, trusts actually have benefits for just about any situation in estate planning.
If you have started estate planning or are at least thinking about it, you might want to consider whether any of these four situations might apply to you.
You think you could possibly need Medicaid
In order to qualify for Medicaid as an older adult, you generally have to completely deplete your financial resources first. Creating a trust at least five years before you apply for Medicaid is ideal. It can help you protect some of your assets while still qualifying for important benefits.
You think creditors might make a claim against your estate
If you want to leave a legacy behind, you probably hope that any wealth or assets left over when you die will go to the people or charities that you care about. Unfortunately, if you die with debt, your estate will have to pay off your creditors before it distributes anything to your heirs. Putting assets in a trust now can protect them from creditor claims.
You own a business or other highly valuable assets
If you have assets that are worth millions of dollars, their value could be a tax liability. Placing your most valuable assets in a trust will decrease the value of your estate and help protect your family from estate taxes after you die.
You’re worried about family conflict
Do you imagine your children fighting tooth and nail over your property or your second wife trying to cut your children out of the estate? If you worried that there will be fighting over the property that you leave behind, one of the easiest ways to prevent those problems is to create a trust. A trust is harder to challenge in court. Trust also gives you more control over the use of your resources, even after you die.
If any of these circumstances apply to you, then a trust might be a worthwhile consideration when creating or updating your estate plan.
