Michael on September 11th, 2007
Bookmark and Share

You: Trusts aren’t for me–they’re for rich people, right?

Many people assume trusts are only for the extremely wealthy. And while there is certainly a place for trusts among the affluent, a revocable living trust makes sense for many people living a typical middle-class lifestyle.

You: How so?

A trust provides for a cleaner passing of your estate—large or small—to your designated beneficiaries.

You: I’m sorry. I speak English.

Sorry. In other words, a trust helps get your money and the things you own to the people you want to get them–and makes less of a mess in the process.

You: But why would I need a trust if I already have a will?

Unlike a will, trust assets avoid the costs and delays related to probate.

You: So it’s one or the other?

Nope. It’s often both.

You: Why would I still need a will if I have a trust?

Although you can pass assets through a trust, you cannot pass children. If you have young children, you need a will to make it clear who should take care of your children (become their guardians) should pass away. Furthermore, a will is used for things that you choose (or forget to choose) to put into your trust.

You: So I need both.

Maybe. Nearly everyone needs a will. Whether you need a trust will depend on several factors including your level of wealth and the complexity of your family situation (married, committed partner, step-children, etc.). That’s why estate planning is one area that often makes sense to talk through with an expert – usually an estate planning attorney.

You: So what now?

Although most people associate trusts with the extremely wealthy, the moral of today’s financial planning education is to be receptive to the idea that a trust may make a bunch of sense for you.

Bookmark and Share

Leave a Reply

You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>