To Trust, Or Not To Trust...

…that is the age-old question! In life, we learn from Shakespeare, “Love all, trust a few, do wrong to none.” But when it comes to managing your assets, is a trust really a good idea? The predictable answer: It depends. While there can be many benefits to establishing a trust, a trust may not always be necessary to accomplish one’s estate planning goals.

A recent piece in Forbes highlights the most compelling reasons why some individuals choose to put their assets into a trust. Some of these reasons 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.

Alternatively, there may be other ways to achieve your estate planning goals without a living trust. 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 that have 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 your 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 $11.4 million per person for 2019. As such, generally only very wealthy individuals in Indiana and Ohio will benefit from an irrevocable trust for the purpose of addressing estate tax concerns.

The decision to establish a trust can be complicated, but it should ultimately be based upon your personal estate planning goals.