Trusts: Not Just For The 1%
Have you always assumed Trusts are just for the wealthy? Have you ever heard the term “Trust Fund Baby” thrown around? There is a lot of misconception as to who might benefit from a Trust in their estate planning. Trusts are not dictated by wealth, but by need or goals. There are many different types of Trusts and many different reasons why a Trust might be beneficial to you.
In general, a Trust is a legal relationship designed by you in which legal title to all or certain property is entrusted to a person or entity who will hold and manage those assets for the benefit of another. Those assets can include your home or other land you own, bank accounts, investment accounts, stocks and bonds, vehicles, life insurance, and certain tangible personal property just to name a few. Not everyone has all of these assets. However, Trusts are designed to meet your needs and not just based on what amount of assets you have.
What if you have a child or adult family member with special needs? A Special Needs Trust will allow you to protect assets for their benefit. Those assets are able to be used to meet the needs of the person with a disability that are in excess of governmental benefits they may be receiving. This type of Trust operates without causing the disabled person to lose their benefits while having those additional assets as a resource.
What if you are looking ahead to a time you may need to qualify for Medicaid? There is a five year “look back” period that could disqualify you if your assets are too high. An Irrevocable Trust is a way to meet Medicaid’s low asset limit while preserving some of your estate for your children. This type of Trust is an excellent way to prepare ahead of time for later benefit qualification.
What if you have a sizeable life insurance policy but are concerned that a young beneficiary could spend that recklessly upon receipt without thought of their financial future? An Irrevocable Life Insurance Trust would allow you to keep some control over large sums to be received by minors or irresponsible young adults. You maintain the ability to protect them until they are mature enough to handle such a large asset on their own.
These are just a few of the many types of Trusts that can be designed to meet your personal needs and goals. Whether you have one asset or several, whether you have $5,000 or $500,000, whether the Trust is for your benefit or someone else’s, the time for estate planning is now!
Post by Ashley B. Fortune, 2021