Some people want to keep their estate plan as simple as possible and only draft a will. Even those who protect themselves with a more comprehensive plan that includes a living will or powers of attorney may decide against adding a trust without much consideration.
A surprising number of people dismiss trusts as tools that are exclusively used by the incredibly wealthy. Those with significant assets can absolutely benefit from a trust. An estate plan with the trust integrated might avoid federal estate taxes, for example. However, there are many other benefits of estate planning trust that apply to the average person.
They can help you get state benefits
As you get older, you may find that you need to stay in a nursing home. If you need to qualify for Medicaid, there can be a delay because of your previous financial transactions. Creating a trust years before you need benefits will make applying simpler.
They can protect your property from creditors
If you die with a lot of personal debt, your creditors could potentially make a claim against your estate. California laws require the repayment of debt before the representative of the estate can distribute your property to your loved ones. Putting assets in a trust means they won’t have to go through probate court and therefore won’t be subject to creditor claims.
They can give you long-term control over your legacy
You can leave thousands of dollars to your grandchild hoping they will use it to buy a house, only to have them go on a trip to Europe or a spending spree after you die. If you create a trust, you can leave instructions about what happens to your property and how people use their inheritance. You can even arrange for unused assets to pass to a charity or someone else when your beneficiaries die.
Understanding how a trust might benefit you and your loved ones could inspire you to add one to your estate plan.