Every individual who is putting together an estate plan has their own priorities. Some people want to protect themselves from incapacity later in life, while others want to protect their children if anything happens to them.
Wills are often the primary instrument used as part of someone’s estate plan, but people can add a variety of other documents should the circumstances justify doing so. Trusts have numerous different uses and can be beneficial for people in a variety of different circumstances. The following are some of the most common reasons that people add trusts to their estate plans.
To plan for long-term care
One of the more common reasons for people to add trusts to an estate plan is to help them prepare for medical support needs later in life. Someone’s assets could make them ineligible for Medicaid when they need to move into a nursing home. Even if they qualify for coverage, the state might try to force the sale of their assets after their death. Transferring assets to a trust five years or more before someone applies to Medicaid can make it easier for them to get support when they need long-term care later in life.
To prevent family conflict
Disputes about estate plans are relatively common. Especially when someone has unusual family circumstances, their surviving loved ones might end up embroiled in conflict over their resources after their passing. Trusts provide more thorough instructions and are harder to challenge in probate court than wills in many cases. They can also provide support for certain family members without eliminating the inheritance rights of others. Trusts can be useful tools for those who worry that their children might fight with a stepparent or each other after the testator’s death.
To keep assets out of probate court
People may have different reasons for wanting to keep their personal holdings out of probate court. In some cases, they want to maintain their privacy by not disclosing the full extent of their estate to the public. Other times, the concern might be that creditors could take legal action against their estate and diminish what their loved ones inherit. Resources held in a trust typically do not pass through probate court and therefore are not at risk if creditors make claims after someone dies.
There are many other reasons for people to establish trusts when planning their estates. Adding the right documents to a thorough estate plan can give someone more protection as they age and better control over their legacy after they die.