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Why would I consider setting up a trust?

On Behalf of | Jul 3, 2023 | Estate Planning |

South King County residents who are thinking about estate planning may have heard people promote trusts as a great estate planning tool.

While they are not necessary or even appropriate for everyone’s situation, Washington residents should be aware of the benefits trusts offer.

  • Property that held in trust will not go through the probate process. It is important though to understand what this means. Trusts cost some time and money to set up, more so than wills. However, when everything goes smoothly, after a person dies, the trust simply continues. There is no need to involve the probate court as there would be in the case of a will.
  • This does not mean that trusts are immune from estate litigation if there is a family or other conflict. However, trusts can offer families a measure of additional privacy, and a person creating a trust can spell out their wishes and intentions in great detail.
  • In some cases, a person can use a trust in order to save on taxes. They also can also offer protection from a loved one’s creditors and can ensure that someone with special needs can both receive support from a family member and continue to get necessary government benefits.
  • Trusts may be helpful in particular family situations. One example is when a person’s loved one may not be financially responsible or may suffer under the weight of a drug or other addiction.

How do I know if a trust is the right option for my situation?

Whether a trust is right for your situation will depend a lot on your financial and personal circumstances. It is best to discuss trusts and all other estate planning options with an experienced attorney.

There are some general estate planning questions that you might want to ask when you think about investing the cost into creating a trust:

  • How important is it to me that my estate will not pass through probate? Are there are other, simpler ways to help my loved ones avoid probate court?
  • What is my tax situation? Will creating a trust improve my position? On the flip side, would creating a trust now help me qualify for Medicaid or other benefits in the future?
  • Do I have any unique family circumstances that make a trust appropriate?
  • How much control do I want or need to have over how my fortune is spent? Generally speaking, trusts give the person creating them more say in how their wealth gets distributed and spent.
  • What is my overall financial situation? For example, trusts often make more sense in larger, more complicated estates.
  • What are the personal and financial situations of my loved ones?