When is a trust necessary or helpful?

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There are many causes of mental and physical incapacity and there are many people who are very bad a managing money, and for one reason or another, should not be left in charge of their own investments.  In these cases, a trust may be a good idea.  It can be a revocable trust or it can be an irrevocable trust. If revocable, terms can be changed. If irrevocable, the terms of the trust typically, cannot be changed.  Usually, in cases of an irrevocable trust, the grantor (creator of the trust) is not the same person as the beneficiary of the trust.

One example that we see commonly is when adult children are stepping in to assist a parent with the management of their assets due to an illness or some other debilitating event.  Establishing a trust with the assets in the parent’s name so that they can be managed for his or her benefit is a good way to assure continuity and care of the assets, as well as the well-being of the parent. Another example is creating a trust for the benefit of a child with a disability. This can be a very good estate planning technique. Family members who have a disability may be relying on government benefits that prohibit them from having assets in their own names.  A special needs trust is a great way to provide for needs that a person might have over and above what the government benefits are providing while protecting their access to those benefits. Finally, a trust for adult children can play a positive role by providing assets that typically cannot be attacked by creditors and clearly designates the inherited assets as the child’s sole and separate property.

To find out if a trust is a good fit for you or a family member’s situation, contact an estate planning attorney or one of our attorneys from Pregenzer, Baysinger, Wideman & Sale.