8 Common Considerations for Using Trusts
Choosing whether to use a trust versus other estate planning tools can be daunting.
There's a lot of information out there suggesting that avoiding probate is somehow the most important objective. However, in Washington, that's not always true. While other states have complex probate laws that can result in costly and time-consuming administration, Washington takes a streamlined approach that can sometimes be easier than dealing with the administrative process of a trust.
Also, it is possible to have trusts in an estate plan and still go through probate. Think of a testamentary trust - which is a trust built into your Will. Your Will has to go through probate to be carried out. If a trust is created under your Will as one of the beneficiaries to receive portions of your estate, the probate would still need to be opened, then the trust in your Will would be created.
8 common considerations of whether to use a trust are as follows:
Do you have out-of-state real estate? If yes, you should consider a revocable living trust.
Does your estate exceed the Washington estate tax limit - currently $3M? If yes, using certain types of trusts may be helpful, especially if you are married. In the context of a married couple, if your combined estate exceeds the WA estate tax limit you should consider a trust.
Do any of your intended beneficiaries receive government benefits? If yes, a special needs trust or supplemental needs trust may be warranted.
Are any of your intended beneficiaries minors, or young adults that are not ready to receive their full inheritance? If yes, a children's trust may be needed.
Are any of your intended beneficiaries likely to have issues with creditors, a bankruptcy, or a divorce? If yes, a certain type of trust may help protect their inheritance.
Is there a need for continuity of ownership or central authority over any of your assets? If yes, there are several types of trusts that may be a great option.
Do you have a desire to provide for someone for the rest of their life, but want whatever remains of your assets to revert back to your chosen backup beneficiaries? If yes, a trust is a great option to ensure assets from your estate stay separate.
Do you want your estate plan to remain private? If yes, a revocable living trust is a good option because it does not automatically get filed with the court the way a Will does. (Your trust could be filed with the court if there's a dispute).
While there may be other considerations for your unique estate that would call for a trust to be used in your planning, these are the common questions that help determine if a trust is appropriate. If the answer to all of these questions is no, then a trust may cause more complications than is needed for your estate planning.
Remember, each estate plan is unique and each state's laws are unique. If you want your specific situation reviewed, you can schedule your consultation.
If you want to learn more, I recommend exploring more about trusts HERE. Or attending one of my seminars. Look for upcoming seminar dates HERE.
