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50 years ago very few people would have considered setting up a Trust, but in recent years Trusts have increasing been presented as a preferred alternative to Wills. However, it is my opinion that Trusts are often being so recommended without due consideration.

The decision to use a Trust greatly depends upon your specific financial and family circumstances, and there should be no generic recommendation to use Trusts for all families.

In fact, some financial and family circumstances actually strongly argue against the use of a Trust.

A few examples of when NOT to use a Trust could include:

  • When a Trust would transfer no substantial assets other than a home (if all other assets transfer by a designation of  beneficiary, like IRAs or other retirement benefits)

  • Where debts exceed liquid assets, other than a home (insolvent estates)

  • Where Medicaid eligibility and homestead ownership may be called into conflict

On the other hand, some situations are strongly conducive to the use of a Trust.

A few examples could include:

  • Families with Special Needs children

  • When a spouse may need to receive long-term care services

  • When extensive property is owned, which cannot easily be transferred in any other way (investment real estate, business interests or other property for which a beneficiary cannot be designated)

  • Larger estates with Estate or Gift Tax exposure

  • When gifts are to be paid out to someone over a period of years or to an underage beneficiary

 

Getting personalized advice from a knowledgeable source is essential to determining if and when to spend time and assets to create  a Trust.

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