Trusts are popular estate planning tools for a number of different reasons. They offer a variety of benefits, including more control over the use of inherited property. They can also serve as a form of support for beneficiaries.
While many people might prefer the convenience of a direct inheritance to the structure of trust distributions, trusts can serve an important purpose for beneficiaries in challenging situations. What types of personal circumstances make the creation of a trust a viable estate planning strategy?
An inability to directly inherit
Multiple types of beneficiaries may not be able to inherit directly. Children don’t truly control their own assets until they become adults. Their parents or guardians may have control over their inheritance but may not be able to access trust resources.
Pets also cannot inherit directly from an estate but can receive support from a trust. Individuals with special needs also may not be able to control their own resources and may rely on a guardian instead.
Complicated legal circumstances
Maybe a beneficiary is in a marriage headed for divorce. Without the structure of a trust, their inheritance could be at risk when their marriage finally ends.
Perhaps an individual has significant debt. A trust can protect resources intended for their support from creditor claims. Trusts can also help people who rely on state aid preserve their access to benefits. They may even prove useful for individuals dealing with substance abuse or gambling issues.
Establishing a trust can be a way to provide long-term support for vulnerable people. Adults concerned about the circumstances of their intended beneficiaries may want to review whether a trust could be a better estate planning tool than a simple will.
