Personal values and family relationships can influence the type of legacy one person hopes to leave when they die. For some people, a simple will is all they really need to express their wishes. They may have only one or two beneficiaries and limited resources.
For others, their family may have grown substantially over the years. Grandparents, for example, may want to leave resources for their grandchildren as well as their children. The more in-depth someone’s legacy wishes become, the more consideration they may have to give the estate planning process.
Many testators eventually determine that a trust is the best way for them to create a lasting and positive impact on the people they love after they die. The following are some of the benefits of using a trust rather than a will to provide an inheritance for family members.
Trusts preserve outside support
In scenarios where people inherit a large amount all at once, that windfall can cause a number of complications. For those with special needs and adults just starting out their careers, certain state benefits might be necessary to maintain their lifestyle. People can lose eligibility for benefits after a lump-sum inheritance. By giving beneficiaries access to resources from a trust rather than bequeathing those resources to them all at once, people can help ensure their generosity does not have unintended negative consequences.
Trusts limit the use of inherited property
There are many ways that people could squander an inheritance. Some people have problems with gambling, while Others may struggle with substance abuse. Even those not plagued by addictive tendencies could burn through an inheritance by shopping and planning vacations. People who want to limit how their loved ones spend an inheritance can include clear provisions in a trust to prevent the misuse of inherited resources.
Trusts can protect resources from creditor claims
Medical creditors, the Medicaid estate recovery program and even student loan companies can bring claims against an estate when someone dies. Their right to repayment generally trumps the right of beneficiaries to inherit property. Those who create and fund a trust can potentially preserve resources by keeping them out of probate court. They can potentially maximize how much of their property passes to people according to their wishes.
Integrating a trust into a comprehensive estate plan can be a smart move for people in a variety of circumstances. Learning more about different types of trusts and the benefits they offer can help testators establish functional and effective estate plans.