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Care Planning Docs: Trust

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If you’re wondering whether to create a Last Will and Testament or a Trust, or perhaps both, there are several things to consider. And with all planning of this nature, it’s important to choose wisely.

One of the biggest differences between a will and a trust, is the court system. A will is subject to probate court when a person dies, but a trust is not. So, this distinction becomes important where time and/or privacy are factors for you and your loved ones.

Probate court is a matter of public record. So a trust can allow for the dispersal of your assets away from public view, while also reducing the amount lost to court fees and taxes.

While a trust is most often utilized to minimize estate taxes, there are plenty of other things that make them an appealing aspect of a well-crafted estate plan. For one, this is a fiduciary arrangement that allows a third party, called a trustee, to hold assets on behalf of a beneficiary. Trusts can be arranged in many ways, specifying exactly how and when the assets pass to beneficiaries.

For example, if there is a grandchild who will need college tuition when they turn 18, that resource can be held in the trust until such a time as it’s appropriate to disperse. The disbursement itself can be specified too. Should they get the money all at once? A monthly stipend? The trust will lay out all the terms. Conversely, since trusts usually avoid probate court, beneficiaries can likely gain access to their inheritance more quickly than they might if a will is involved.

Similar to the Executor of a will, the trust appoints a Trustee to administer payment of last bills and distribute the assets in accordance with the terms.

With a trust you can specify the terms precisely, controlling when and to whom distributions may be made. Complex situations can be laid out quite simply with the right kind of trust. Children from more than one marriage, for example, can be accounted for and gifted to differently. A properly constructed trust can also help protect your estate from your children’s creditors, or from beneficiaries who may not be as adept at money management.

There are many different ways to structure a trust, and logic behind choosing one over another. Everyone is unique. We can help clarify if the trust you have is Medicaid compliant, as well as guide you in understanding what kind of trust best applies to your situation. We’ll put your mind at ease, and help you ensure that your legacy is protected.

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