Due to changes that limited federal estate tax to only high valued estates, many people believe there is no reason to set up a trust to guard their assets. However, a recent article outlines five reasons that trusts might be the right choice even for smaller estates:
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1. Holding assets in trust may allow estates valued at over 1 million dollars to avoid significant Massachusetts tax liability.
2. A trust will avoid the often long and costly, and always public, probate process, where the will, the accounting of the estate disbursements and revenue, and the probate asset inventory will all be available to the public.
3. Allowing assets to be distributed through a trust will give parents the ability to moderate how much access a young child has to a house, life insurance, retirement assets, or cash, so that the children are not put in a position to misuse estate assets. It may also help where there is concern over poor money management skills, business liability, or creditor problems.
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4. A child’s eligibility for public benefits can be affected if the child receives an inheritance. Whereas, holding assets in trust for the benefit of the child will help ensure that the child remains eligible and that resources are there to provide care over the long term.
5. A revocable trust also gives a person the ability to determine how he or she will be cared for and how decision will be made in the case of incapacitation.