Many people draft wills to designate their beneficiaries and provide instructions about the distribution of their property after their passing. Others create a much more structured testamentary instrument in the form of a trust.
Trusts can provide a range of different benefits. They are useful for people in many different challenging circumstances, including the three common scenarios below.
1. Potentially problematic beneficiaries
Perhaps an older adult revising their estate plan has an adult child who struggles with addiction. Parents could fund a trust and limit how a child uses inherited resources. Challenging marriages, financial hardship and other personal issues may make a trust a better option than a direct inheritance.
2. Concerns about long-term care
Perhaps an individual intends to apply for Medicaid as they age, and they don’t want to risk being ineligible or the courts forcing the sale of their home to repay the benefits they received. People thinking about their long-term care needs may choose to establish trusts well before they ever apply for Medicaid to preserve resources and enhance their eligibility.
3. Complex family circumstances
Maybe there are two adult children in the family who always find reasons to fight. Perhaps the testator has started a blended family and intends to leave unequal bequests to their children and stepchildren. In scenarios where people anticipate conflict related to their estate planning preferences, creating a trust can be a smart decision.
Making choices about how to fund a trust, choosing the type of trust and integrating the right provisions into the trust paperwork are all steps that typically require legal guidance. Working with an estate planning attorney can help people recognize when they need to trust and create one that achieves their goals.
