Most estate planning lawyers will try to push you into creating a trust, but the truth is that the use of beneficiary designations and/or wills can sometimes get the job done just as well as a trust would. Additionally, trusts are usually more expensive than Wills and beneficiary designations, making trust formation a big purchase most individuals and therefore, should not be undertaken lightly. That said, there are several circumstances in which creating a trust for your Missouri estate would be the most beneficial thing to do. Forbes weighs the pros and cons of creating a trust so you can make a more informed decision.
One of the first factors you want to consider is how much of your estate you can shield from probate. Probate is costly and can take several months to several years to complete. For many, this alone is reason enough to create a trust. However, before you invest in a trust, consider how many of your assets are actually subject to probate. For instance, jointly owned assets with rights of survivorship such as annuities, life insurance policies and retirement accounts are not subject to probate. Nor are bank or investment accounts for which you filled out a “payable on death” or “transfer on death” form. To access these accounts, all your beneficiaries would have to do is show up at the institution with your death certificate and a valid form of identification. If many of your assets are already accounted for, a trust may be a frivolous expenditure.
On the other hand, if you have several assets that remain subject to probate, you may want to create a trust. This is especially true if you do not anticipate that your estate will qualify for simple probate (qualifying factors include your estate going to a surviving spouse or having a small estate) or if you have real estate out of state.
If you have a child with special needs for whom you want to provide long after you are gone, you may wish to create a special needs trust. This type of trust is ideal for individuals who will never be able to manage themselves.
Finally, if you are fortunate enough to have an estate worth more than $5,340,000, your estate is taxable. Forming a trust can help you avoid costly state taxes.
The content in this post is for informational purposes only. It should not be construed as legal advice.