Do I Need A Trust?
This is one of the first questions clients ask at the beginning of the estate planning process. There is not always a simple yes or no answer to this question, as the decision to use or not use a trust always depends on the goals of the individual for his or her estate plan. While trusts can offer many benefits, a trust may not always be necessary to accomplish one’s estate planning goals.
The most common reasons individuals choose to utilize trusts include avoiding probate, protecting children or loved ones, and reducing estate taxes. Two different types of living trusts, revocable and irrevocable, can be utilized to accomplish different goals.
There may be other ways to achieve these estate planning goals without a living trust, however. For example, there are measures you can take to avoid probate without a trust such as setting up assets to transfer automatically upon your death. Assets that are held jointly with another person or assets that name beneficiaries or transfer/pay on death designees can be passed to loved ones outside of the probate process. Further, a testamentary trust can be written into a will to protect assets upon your death for the benefit of children or loved ones. This type of trust would only come into existence upon your death. Additionally, Indiana and Ohio do not collect estate taxes, and the federal estate tax exemption is set at $13.99 million per person for 2025. As such, generally only very wealthy individuals in Indiana and Ohio would benefit from an irrevocable trust for the purpose of addressing estate tax concerns.
Understanding the key characteristics of a will versus a trust can help you decide how best to achieve your estate planning goals.
Wills
Clear expression of wishes for transfer of real estate
Clear expression of wishes for transfer of personal belongings
Clear expression of wishes for distribution of financial assets
Selection of a guardian for minor children
Selection of executor or personal representative to manage distributions according to the will
Becomes public once submitted to probate
Assets that pass through a will are subject to the probate process and fees
Generally less expensive to set up than a trust
Typically utilized even when a trust is established to “pour over” assets into the trust that were not re-titled into the trust during the testator’s life
Trusts
Clear expression of wishes for transfer of real estate
Clear expression of wishes for transfer of personal belongings
Clear expression of wishes for transfer of financial assets
Selection of a trustee to manage trust assets
May be used to set up distributions to beneficiaries over a period of time
Funded during the grantor’s life by re-titling of assets
Remains private outside of the probate process
Generally more expensive to set up than a will
For more information on the topic of wills versus trusts, this recent article from NerdWallet provides a simple breakdown.