Do You Need a Trust?

Trusts can be valuable instruments in an estate plan. They allow you to protect your assets from creditors, to channel them to designated beneficiaries and allow you control of assets during your lifetime. Trusts, however, are not for everyone and should only be used where you have substantial assets or have particular considerations in mind.

Most people’s estate plan consists solely of a Last Will and Testament. A Last Will and Testament is sufficient for many people who have modest assets while allowing them to pass their property to whomever they wish with a few exceptions regarding disinheriting spouses or children. You can name your own executor or administrator, guardians for your children and how you wish to be buried.   Last Will and Testaments do have to go through probate.

Factors in Whether You Need a Trust

There are circumstances where you might seriously consider setting up a trust or more than one.

  • You have real property in more than one state
  • You have at least $100,000 in assets and own real property
  • A child has special needs
  • Your estate is subject to estate taxes (over $1,000,000.00 in Massachusetts)
  • You wish to fund a child’s education
  • You have considerable assets but do not trust your children to spend it wisely
  • You want privacy–probate proceedings are public record

Any of these factors might lead you to consider having Patricia Bloom-McDonald, a Westport trust lawyer, review your finances and goals to see if a trust is right for what you wish to accomplish.

What Can a Trust Do?

In deciding whether a trust can benefit you, consider the following:

  1. Estate taxes. Estate taxes are an important consideration since Massachusetts imposes estate taxes on estates with a gross value exceeding $1 million, or $2 million for married couples. This is the value of the gross estate minus allowable deductions. A trust can minimize the taxes or protect real estate or business interests from being sold to pay the taxes. Your Westport trust lawyer, Patricia Bloom-McDonald, can explain how this can be accomplished.
  2. Special needs children. Children diagnosed with Autism is on the rise and many of these children will need public assistance such as SSI and Medicaid. Of course, special needs children include any with disabilities such as cerebral palsy, hearing impairment, blindness, etc.. If your estate directly passes assets to a special needs child, this can jeopardize their receipt of government benefits. A special needs trust can assist these children with funds for basic necessities as well as other needs while they continue to receive government benefits. The trust can also be funded from personal injury settlements or awards or even divorce settlements if an adult child suffers a traumatic brain injury or other disabling condition.
  3. Protect assets from creditors. Funds in a trust are not subject to seizure by creditors. If you are sued for an accident or other tort and insurance does not cover you or is inadequate, the judgment creditor cannot look to a trust’s assets to collect.
  4. Protect assets from Medicaid or MassHealth. Any assets transferred 5 years before entering a nursing home are subject to seizure after your death. You are only allowed $2000.00 in countable assets in your name. If you have a spouse who plans to continue living in the community, your spouse may only have $109,560 in their name. You may shelter these assets in an irrevocable trust that is exempt from nursing home costs.
  5. Protect your business. If you have a business, then a revocable living trust that holds the business interests may be helpful. A successor trustee can continue to operate the business if you become incapacitated or once you pass away.
  6. Minor beneficiaries. If you plan on leaving any portion of your estate to minors, then you could set up a testamentary trust – which is a trust created by your Last Will and Testament.
  7. Privacy concerns. Las Will and Testaments or other matters in probate are open to the public. If this is a concern to you, then a trust that owns most of your assets is kept private and the public will not see how your assets are distributed.
  8. You have special plans. If you have an heir who cannot be trusted to spend inherited assets wisely, then a spendthrift trust can assist in limiting what they can receive at any one time. There are also college education trusts with special terms that you can include.
  9. Trust Assets can be paid out immediately. Depending on the wording of the Trust, the assets held in the Trust can be distributed to the named beneficiaries immediately.  Whereas, a Last Will and Testament goes through the probate process, which could hold up the assets from distribution up to twelve months or longer.  Trusts to do not require Court oversight.

Consult Westport Trust Lawyer, Patricia Bloom-McDonald

Trusts are complex instruments that can be invaluable in shielding assets from creditors and taxation, providing financial assistance to children or in protecting business interests. There are numerous types of Westport trusts that Patricia Bloom-McDonald can discuss with you and tailor to your particular needs and goals.