“Well, I don’t know as I want a lawyer to tell me what I cannot do. I hire him to tell how to do what I want to do.” – J.P. Morgan
Trusts serve specific purposes. If you think you may need one, consult an estate lawyer.
Having a trust may make good financial sense in certain situations. Trusts can help you pass wealth privately and more efficiently to your heirs whether they are people or institutions. In doing so, it can help avoid the costs and delays that are oftentimes associated with the probate process. Avoiding probate with a trust can give you greater control and privacy and potentially lower estate taxes.
A trust can enable you to place rules around the distribution of your money, including your retirement accounts, helping to ensure that your retirement assets are distributed the way that you have planned for them to be. For example, you can put rules limiting the ability of your heirs to spend the money inappropriately. Perhaps you have a special needs adult child who needs special provision in a manner that doesn’t disqualify them from needed benefit programs.
Trusts don’t make good sense for everyone, though. If your lawyer is recommending a trust and you are unsure about this recommendation, you should consider seeking a second opinion from both a lawyer and from a financial advisor in order to make sure that it makes good sense for you. Trusts can be complicated and expensive to create and maintain. If you’re going to have one, you want to be doubly sure that you actually need it and that you implement it correctly.