People often as me about a will. Then they’ll say something like, “do I need a trust too? I’m leaving everything to my wife (or husband). And besides, we don’t have much.”
Even if you’re leaving everything to your spouse and even if you don’t have a lot, a trust makes sense if you have any of these situations:
- Minor children. It’s fine to leave everything to your spouse but what if you both die together? Minors can’t own anything so someone would have to set up a guardianship. That’s a big expense and the guardian might not do what you hope he would do simply because of the rules regarding guardians.
- You’re concerned about you or your spouse becoming incapacitated, such as by dementia. If you become unable to manage your own affairs and haven’t made prior arrangements, such as through a trust, again a guardian might be necessary.
- Privacy. A will probate is a public proceeding. Someone can see how you’ve distributed your estate and what you owned at your death. Having a trust to hold everything keeps the assets and distribution private.
- You want to provide for grandchildren. If you leave everything to your children, there might be something left for grandchildren, but there’s no guarantee. Once it passes to the children, it’s theirs to do with as they please. If you want to leave something to grandchildren, you’ll need a trust.
- You have property that has increased in value that you want to sell, but you don’t want to pay the capital gains taxes. Depending on your needs and the type of trust you create, it’s possible to pass title to a property that has appreciated in value since you got it to a trust and have the trust sell it without having to pay capital gains tax.
These are just a few of the situations where a trust could be useful. Talk with your attorney and financial advisers about whether a trust is right for you. If you have questions, please contact us.