You might think that trusts are only for the obscenely wealthy—families like the Rockefellers, the Gates, and the Fords. “I don’t have the kind of money that makes a trust necessary,” you think.
But that’s where you’d be wrong.
If you have a net worth of $100,000 (and you might be surprised how much your estate is worth) and meet one of several conditions, a trust could be beneficial for your family.
A recent CNN Money article spells out when you should consider getting a trust:
- When a significant amount of your estate is in a business, real estate, or art
- When you want to leave your estate to your heirs in separate installments or based on certain conditions
- When you want to support your spouse but also want to make sure that your other heirs get the remainder of your estate after your spouse’s death
- When you want to avoid estate taxes
- When you want to provide for a relative without disqualifying him or her from Medicaid
Trusts have a number of important advantages over the last will and testament, another estate planning tool.
A trust will allow you to set the terms of the distribution of your assets. For example, you can set up a trust to give money to your grandchildren only if they graduate from college. Or you can delay the delivery of their inheritance until they are old enough to be responsible with it.
A trust can also reduce estate and gift taxes and avoid the hassle and expense of probate court. Probate is the process through which your last will and testament is declared valid and your estate is distributed. This process can cost between 5 and 7 percent of your estate.
Finally, a trust can better protect your estate from creditors and lawsuits.
If you are considering a trust, feel free to contact an experienced Alabama estate planning attorney at Martinson & Beason, P.C. with your questions. We’ll let you know if a trust is right for you and, if so, what your options are.