Just yesterday, I was asked by a friend “Do you think that I need a trust?” “Well,” I said, in my usual lawyerly fashion, “it depends.”
In our law firm, we draft many trusts for many different reasons. We also discuss with clients whether or not they should have a trust of any sort. There are many types of trusts, and a well-crafted estate plan will employ trusts of specific types for specific reasons that are specific to that client’s assets and plans for the future.
Trusts can be:
- Created and funded while a person is alive
- Funded after a person’s death
- Revocable, meaning that they can be amended at any time during the lifetime of the “grantor” (the person who creates the trust)
- Irrevocable, even during lifetime. Of course, a trust that is created or funded after death is always irrevocable.
- A testamentary trust, which is a trust included in a Will that springs into life at the death of the creator (testator) of the will.
Not everyone needs or should have a trust included in his or her estate plan. The reasons for having or not having a trust include:
- The types of assets in the estate
- Whether or not probate should be avoided
- Planning for incapacity
- To benefit a family member that is incapacitated or unable to manage their finances
- Planning for the futures of beneficiaries
- To benefit a child with a disability
- To benefit a child without a disability
How did I answer my friend’s question? I reviewed with him what assets he owned and his goals for his beneficiaries. In his case, mostly because of the nature of the assets, we agreed that he did not need to create a new separate trust to hold assets during his lifetime.