Who should have a trust?
You should discuss the advantages of a Trust over a Will (even with a Will creating a “Testamentary Trust”) with an attorney if: (1) you are the parent of minor children, or (2) privacy is important to you, your business or your family, or (3) you own real property, particularly any property outside of your home state, or (4) your estate has a gross value in excess of $1,000,000 (this amount increases slowly to $3.5 million in 2009; the tax is completely repealed in 2010, but reinstated in 2011), or (5) you wish to avoid conservatorship or probate. A Trust in NOT necessary for everyone, and some lawyers prefer to have matters go through probate, but it certainly makes sense to discuss it.
Almost everyone should have a trust, especially those who live in states where there are statutory probate fees. Setting up a trust is beneficial if you own a home or real estate. Even if you live in a state where there aren’t statutory probate fees, a trust will usually cost less than the lawyer’s fee and court fees for the probate proceedings. The court and the lawyers benefit if you do not have a trust. Even the federal government – and, in some cases, the state – benefit when estate taxes are due. Who doesn’t need a trust? People who can pass property and assets by a probate affidavit* or other informal procedure should not have a trust. For those who are in the midst of applying for Medicaid or if there is a strong possibility, because of age and financial conditions, that such assistance may be needed in the near future, a trust is not recommended as well. If you have Medicaid and already have a trust, be sure to consult an expert in this area about financial ramifications. (Reme
Almost everyone should have a trust, especially those who live in states where there are statutory probate fees. Setting up a trust is beneficial if you own a home or real estate. Even if you live in a state where there aren’t statutory probate fees, a trust will usually cost less than the lawyer’s fee and court fees for the probate proceedings. The court and the lawyers benefit if you do not have a trust. Even the federal government – and, in some cases, the state – benefit when estate taxes are due. Who shouldn’t have a trust? People who can pass property and assets by a probate affidavit (see Tip below) or other informal procedure should not have a trust. For those who are in the midst of applying for Medicaid or if there is a strong possibility, because of age and financial conditions, that such assistance may be needed in the near future, a trust is not recommended as well. If you have Medicaid and already have a trust, be sure to consult an expert in this area about financial ram
There are a variety of situations in which you would benefit from having a trust as part of your estate plan: • To Avoid Estate and Gift Taxes – Beginning in the year 2011, the federal government will be taxing anyone who owns more than $1,000,000 in their gross estate at a rate up to 55%. A trust can help to limit the amount included in your gross estate. • To Avoid Probate – A revocable living trust allows you to keep control of your assets during your life, during any periods of incapacity (e.g. Alzheimer’s), and even after you die. Probate can be costly and time consuming, in addition to the potential family turmoil that can be created by a disgruntled potential heir. • Qualifying for Medicaid – A Qualified Income Trust will help you reduce the countable income that the government will try to use to exclude you from eligibility for Medicaid. See more info under Asset Protection heading. • Protection from Creditors – The state of Florida allows for a spendthrift trust to protect ass
There are certain types of general situations when a trust is often preferable to a will: • For those with minor children • For those who have lost their spouse • For those with beneficiaries who have special needs and are, or could be, on state assistance • For those who believe they may become mentally incompetent in the future and will need help managing finances • For those who wish to avoid probate • For those who want do not want their children to receive a large sum of money outright • For those who want to protect a spouse’s inheritance from possible nursing home costs • For those who wish to take income from their assets during life, and leave the assets to a charity on death
