Some hear about estate planning and presume that it is only for the rich. However, it can benefit individuals, couples and families at a whole range of financial levels. One way it can do so is with the establishment of trusts. Recently, an industry expert published a set of circumstances in which a trust can be a good idea.
One is if you want your heirs to receive what you bequeath to them in stages or upon meeting certain conditions. This is a common use of a trust. Parents and grandparents may worry about simply leaving a huge lump sum to their children and grandchildren, afraid that the wisdom to manage it well may not exist yet.
A trust can let them structure disbursements so one amount is given out at a young age, another at a middle age and another at a later age. That way they know the person getting the money will have it at different points in life and won't blow it all on fast cars at age 20. Additionally, the person establishing the trust may include conditions, like that the recipient of the money finish college before receiving one of the disbursements. This is a popular approach that allows for life guidance to go along with financial provision.
Another good reason for a trust is to provide for children of a first marriage. Trusts can be structured so that a current wife or husband is provided for, but a certain amount is specifically accorded to the children. This can preclude disputes.
While these are excellent reasons for including a trust in estate planning, there are many more. Which ones matter most depend simply on individual circumstances. An attorney can help explore the options.
Source: CNN Money, "Estate planning: Is a trust beneficial?" Jul. 28, 2014