Contrary to what a lot of people think, estate planning isn’t just deciding whom to leave your property to when you die. Estate planning also involves protecting yourself if you become very sick or get hurt, making sure you and your family have necessary protections and taking control over your legacy.
The way that you handle your estate and plan for the final years of your life often determines how people remember you. You can take control of that process by sitting down to create an estate plan if you haven’t already or reviewing and improving an existing estate plan.
There is one tool that people often ignore that can address multiple concerns that people have about their golden years and estates.
Trusts are robust and flexible estate planning tools
Although many people think of affluent families when someone mentions trusts, most families will find that they have at least one situation that would benefit from the use of a trust. Trusts serve several important purposes.
They take legal ownership of a property and remove it from an individual. They also provide instructions on how to maintain or distribute those assets and under what circumstances a trustee can do so. A trust gives someone long-term control over the use of their property while they are still alive and after they die. It can allow for estate planning that benefits multiple generations of a family.
What reasons do people have for creating a trust?
Trusts can reduce someone’s personal holdings so that they can qualify for state benefits and protect assets from claims by creditors after they die. People use trusts for many reasons, including:
- Wanting to disinherit an immediate family member
- Wanting to leave money to charity
- Worrying about a loved one with an addiction
- Providing for a family member with special needs
- Qualifying for Medicaid if necessary
- Avoiding Medicaid recovery efforts against their home
- Reducing tax liability for large estates
- Protecting assets from creditor claims after their death
- Establishing a multi-generational legacy
Trusts take multiple forms and allow for careful personalization. They are tools that allow someone control and protection.
A trust is only as good as the language used to create it
There are certainly boilerplate trust documents, but using standardized paperwork reduces the benefits of creating a trust. You want a trust created to serve your unique needs.
Taking the time and effort to make a highly specific and individualized trust optimizes the benefits that you receive from doing so. If you are about to retire or undergo any other major life change, like the addition of a child to your family or the purchase of your first home, it may be time to consider creating a trust to protect yourself and the people you love.