For some people, the idea of a trust conjures images of spoiled children raised by the enormously wealthy. However, trust-fund babies are a tiny percentage of the people who benefit from trusts in the United States.
Many different kinds of people would benefit from the creation of a trust as opposed to simply receiving a lump-sum inheritance when a member of their family dies. If someone you love falls into one of the three categories below, you may want to think about adding a trust to your estate plan.
People with special needs
Family members with Down syndrome or cerebral palsy may require financial support and daily assistance for the rest of their lives.
By putting any inheritance for a family member with special needs into a special needs trust, you can give them structured support that lasts for years. You also eliminate the risk that they would mismanage their inheritance or lose out on crucial state benefits because of what you leave for them.
People with a history of addiction
If you have a child or a spouse who has struggled with substance abuse, then receiving a large inheritance right after a terrible loss could set them up for big mistakes.
Creating a trust is a way to protect an addicted family member from themselves. You can require that the trustee directly pay for approved expenses, thereby eliminating the possibility that someone could use trust assets to further fund their addiction.
Siblings who always fight or children who resent their stepparent
Sometimes, it is not a personal characteristic but rather a history of family conflict that will make a trust beneficial.
If you have children who have fought with each other their entire lives despite your best efforts, using a trust for your estate plan could be a smart move. The same could be true if you have children who have always resented your decision to remarry. You can absolutely leave resources for everyone you love while reducing the likelihood that they challenge your plan or fight by creating a trust before you die.
Using the right tools for estate planning, like a trust, can help you create a meaningful legacy that reflects your family’s unique needs.