Estate planning is most often associated with preparing a will, but sometimes a trust is a better method for passing along your assets after your death. The flexibility of a trust can be beneficial in several circumstances. There are several reasons why a trust may be a better option when creating an estate plan.
You Want to Avoid Probate
Probate can be time consuming and costly, creating a period where bills can't legally be paid and assets can't be managed by heirs. A trust avoids this delay and immediately puts assets in the hands of the successor.
You Have Heirs With Special Needs
For someone with a disability, government benefits such as Medicaid are vital. If you leave assets to a disabled person via a will, they may lose eligibility for a wide range of needs-based government programs. A trust can be created to protect benefits by allowing proceeds to only be used for costs that government programs will not cover.
If you wish to leave money to an heir dealing with mental illness or addiction, a trust can promote long-term financial stability by stipulating how the proceeds can be used.
You Want to Leave Assets to Minors
The law does not allow minors the legal ability to receive assets directly, which means that the court would need to appoint a conservator to receive an inheritance left to someone under age 18 via a will. A trust allows you to forgo this process because the minor is not directly receiving the assets. They are simply benefiting from the proceeds in a way that you have determined to be appropriate, such as paying for educational expenses.
You Want to Provide Heirs With Protection From Creditors
A trust keeps assets from being directly owned by heirs, while allowing them to use proceeds as you stipulate. This means that the assets held by a trust are protected from creditors if the heirs face financial issues related to divorce, loan default, bankruptcy, business loss, or a civil lawsuit.
You Are Worried About Estate Taxes
Although the vast majority of Americans do not need to be concerned about estate taxes, high earners with significant investments can use trusts to reduce their estate taxes in ways that are not possible with a standard will.
Colin Smith Law can help you determine if a trust is appropriate for your estate planning needs.
Contact An Experienced Dallas Estate Planning Attorney
Whether you're planning your own estate, trying to understand a parent's estate plan, caring for an aging relative or facing probate, our experienced Dallas estate planning and probate attorney can help you navigate the process and safeguard your family's future. Contact Colin Smith Law today to schedule an appointment for a free initial consultation.