For many people, trusts are synonymous with the incredibly wealthy. Many people overlook the potential benefits of integrating a trust to their estate plan because they assume that only someone with millions of dollars worth of assets needs a trust.
Trusts are actually powerful legal tools that can help people in everyday circumstances, including those planning their estate or those looking forward to the care they will need at the end of their life. What do people use trusts for?
People use trusts to have control over their legacy
People recognize a trust as a tool that helps people pass on their property to others and financially support their loved ones. Other people may use a trust to set aside resources for a charity.
Some people even use a trust to give property to the local government for the creation of a park or to a local university for a scholarship fund. If someone wants to leave a specific legacy behind, a trust can help by controlling the use of the assets used to fund it.
People use trusts to protect their loved ones
Sometimes people don’t make the best financial decisions for themselves. Perhaps they have a disability or maybe they have struggled with addiction in the past. You don’t have to have millions of dollars for someone to inherit for there to be risks involved. A spendthrift or special needs trust can be a safer way for someone to leave a legacy behind for a vulnerable family member.
People use trusts to protect their assets
Maybe you worry about incurring medical debt as you get older and want to make sure that creditors can’t take your home after you die. Perhaps you run a business and want to make sure that a lawsuit would never leave your family homeless. Moving major assets into a trust changes their ownership and makes them less vulnerable to create claims in civil lawsuits or debt collection efforts.
People use trusts to qualify for necessary medical benefits
As you get older, the amount of support you need in your daily life will increase. You may even believe you need Medicaid because you won’t have enough money set aside to cover nursing home costs out-of-pocket.
Qualifying for Medicaid can be hard because the program holds every piece of property you own against you. Creating a Medicaid trust can help protect your property while simultaneously ensuring you get the support you need when you get older.
If any of these circumstances reflect your personal situation, it may be time to look at creating a trust as part of a new estate plan or integrating a new trust into an existing estate plan.