Are Trusts Only For the Super-Rich?

While it is true that you should have a fair amount of assets before you consider setting up a trust, a trust is no longer the province of the ‘super-rich.’

Simply stated, a trust is a legal document that makes it possible for you to put aside some of your money and direct how it will be used upon your death or in some form of trust, while you’re alive. A trust may also ease your tax bite.

A trust generally offers several advantages: among them, the assets don’t have to go through probate, which saves time and money. Additionally, you may be able to maintain control over the trust assets while you’re alive and capable; sick and incapable; or as part of an estate plan at your death.

Many individuals and families have found that trusts offer a number of interesting financial planning opportunities. Even where your estate plan calls for all the assets of the first-to-die spouse to pass to the surviving spouse under the unlimited marital estate tax deduction, significant estate tax may be due on the death of the surviving spouse. Proper use of carefully drafted non-material trusts for the benefit of the surviving spouse and/or children may keep these assets out of the surviving spouse’s estate and reduce the overall tax bite on the estate plan.

So-called ‘living trusts’ have become very popular with those interested in avoiding the expense, delay and publicity of probate; while allowing the grantor to maintain control over the trust assets during his or her lifetime, if capable and competent.

The type of trust you use depends on your personal situation and the advice you receive from a legal expert. Since there are many types of trusts, only a complete evaluation of your family’s needs will determine which trust should be used.