Many people want to avoid complicated, confusing estate plans. They try to create the simplest, most straightforward documents possible. The goal is to keep costs low and to prevent confusion among their beneficiaries after their passing.
However, more thorough, complex estate plans can be beneficial in a variety of circumstances. An increasing number of people now use trusts as part of their estate plans because they worry about their family members.
Trusts may have an association with incredibly wealthy individuals, but they are not the only ones who benefit from establishing trusts as part of an estate plan. Those in difficult family circumstances may also find that trusts are useful.
What types of situations might make a trust a smart estate planning tool?
A loved one struggling with addiction
People may worry that their only option might be to disinherit a loved one who faces addiction-related challenges. Some people struggle with drug and alcohol use. A large inheritance combined with the tragic loss of a loved one might lead to them going on a bender. Other people may have addictions to gambling and other unsafe behaviors. A large inheritance could fund their activities. A trust can prevent people from misusing what they inherit.
Beneficiaries in bad marriages
Few things are more difficult to witness than a loved one struggling through an unhealthy and unhappy marital relationship. While people may secretly hope that an individual files for divorce, they may also worry about what might happen if a divorce occurs. A large inheritance received before a divorce could be vulnerable when someone’s marriage ends. A trust helps prevent claims of commingling so that the beneficiary, not their spouse, receives the resources used to fund the trust.
Loved ones who constantly fight
Another reason people establish trusts as the way to control the descent of their property is concern over probate litigation. Siblings might do permanent damage to their relationship fighting over resources. Stepchildren might forever alter the relationship they have with a stepparent by contesting a will and trying to eliminate the stepparent’s inheritance. Trusts are generally harder to contest in probate court than wills. They can help prevent families from fighting unnecessarily or dragging the estate through probate court in the hopes of gaining a larger portion of the estate.
Adding a trust to an estate plan can help preserve someone’s legacy and optimize the positive impact an inheritance creates. Trusts are one of many useful estate planning tools that can help people achieve their legacy wishes.
