10 Reasons to Use a Trust in Your Estate Plan

While trusts may seem necessary only for the wealthy, there are actually many benefits for creating them, even if you’re a member of the middle class.  Here are the top 10 reasons why you might consider using a trust in your estate plan:

  1. Wasteful spending. Some experts estimate that heirs spend 80% of their inherited money in the first 18 months of receiving their inheritance.  Without a trust in place, your heirs will receive their inheritance outright.  A trust can protect your heirs from quickly depleting their inheritance by spacing out distributions over a certain number of years or for their lifetimes.
  2. Wrong heirs. A trust can keep your estate assets in your blood line and not to your heir’s in-laws or your surviving spouse’s new partner. A trust can delay distributions so that your grandchildren inherit your estate after the death of your children instead of your children’s spouses.
  3. Worthless investments. A trust can protect your loved ones from investing their inheritance in worthless investments that will quickly deplete their inheritance or provide little to no return.
  4. A trust can ensure that assets and IRA/pension plans are used to provide for the surviving spouse for life, rather than being liquidated and spent on a new partner.
  5. A trust can control how assets are allocated among children and step-children upon the death of the surviving spouse. If you have a blended family and have children from a prior marriage, a trust can ensure that all of your children will be taken care of after your surviving spouse passes away.
  6. A trust can maximize federal estate tax savings, if necessary.
  7. A trust can control/hold assets in trust and limit distributions if heirs have alcohol/drug issues. Failure to leave your estate in trust to these individuals means they might stop working or going to school and use their inheritance to fund their lifestyle of drugs and alcohol.
  8. A trust can create asset protection for heirs from their creditors. Failure to leave your estate to your heirs in a trust means that family members own the assets outright and if they are subject to a lawsuit or the claims of their creditors, their inheritance may be lost to their creditors. Inherited IRAs also can get asset protection with a trust.
  9. A trust can avoid probate delays, costs, and burdens for your loved ones. Probate is costly, stressful, and time-consuming.  The only people who benefit from probate are the attorneys.
  10. Lastly, a trust can keep your estate private from the public. Simply implementing a Last Will and Testament will not keep your estate private.

The purpose of establishing a trust is to ultimately help you determine and implement who gets what and when.  When you meet with your estate planning attorney, make your intentions known so that your trust can be tailored to your specific needs.  It becomes extremely important that your trust be properly drafted and funded, so that you can maximize all the benefits a trust has to offer.

Bill Hesch is an attorney, CPA, and PFS (Personal Financial Specialist) licensed in Ohio and Kentucky who helps clients with their financial and estate planning.  He also practices elder law, corporate law, Medicaid planning, tax law, and probate in the Greater Cincinnati and Northern Kentucky areas.  His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky.


(Legal Disclaimer:  Bill Hesch submits this blog to provide general information about the firm and its services.  Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel.  While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog.  Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)