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A revocable living trust adds value to your estate planning, but some of the older reasons to create a trust aren’t true today. The tax law changes of 2012 significantly reduced the need to avoid estate taxes by using trusts. For most, the non-financial reasons for a trust are what really matter.

Why People Created Trusts in the Past

We’ll get to why you should still consider a trust in a bit, but first, let’s take a look at why people created trusts in the recent past.

Historically, people with trusts were quite wealthy, and only those with a certain level of assets needed them. While wealth used to be the main reason for having a trust, tax law changes have made that much less important.

Until recently a trust was one of the primary ways to avoid estate taxes. However, federal estate taxes do not apply for an individual in 2016 until his/her assets reach approximately $5.45 million, and for a married couple this doubles to $10.9 million. More than 95% of clients I see have assets below these thresholds. Some states do have lower state-specific estate tax exemptions, but for citizens of Missouri and Kansas, there are no state-specific estate taxes. In addition, the new IRS portability laws make it much easier to do estate tax planing without the need for complicated trusts. So, today most individuals/families do not need a trust for estate tax planning.

Why You Should Consider a Trust Today

So, why should you still consider a trust for your estate planning needs? Of course every client is unique, but here are the most common financial and non-financial considerations:

1. Trusts Are an Efficient Way to Avoid Probate — All assets within a revocable living trust will pass to the beneficiaries outside of the probate process. Most people want to avoid probate due to expense, delays and to protect privacy. Of all the ways to avoid the cumbersome probate process, trusts are easily the most efficient. Especially for treasured personal property, the revocable living trust has significant advantages over other alternatives.

2. Trusts Are the Most Effective Means to Manage Your Finances Concerning Disability and Long-term Care — A revocable living trust is the most effective way to care for yourself during times of disability and long-term care. The terms of the trust govern when your successor Trustee steps up to care for your financial needs, and there is never a change of ownership with trust assets. Many asset holders and institutions find this much easier to manage than the alternatives. Also, the possibility of having a durable power of attorney turned down is much lower.

3. Trusts Offer the Most Flexible Options to Distribute Assets and Also Provide the Power of Asset Protection for Beneficiaries — A revocable living trust provides you significant advantages when it comes to how you decide to leave assets to your beneficiaries. The trust can customize the way assets are distributed, and most importantly, beneficiaries receive a level of asset protection. For instance, a trust can protect your loved ones from the risk of people taking advantage of them after they receive an inheritance. Imagine your intended inheritance being cut in half if your child unexpectedly divorces. You can also protect children from their own weaknesses by keeping an inheritance available for critical needs like health, education and other defined needs, but deferring the beneficiary’s ability to spend the inheritance in its entirety until a later age. Don’t think of this as “ruling from the grave.” Instead, realize that you are helping your beneficiaries plan for the long-run and possibly saving something to pass along to a grandchild.

4. Trusts Create the Ultimate Gift for Your Beneficiaries Both Financially and With Peace of Mind — Having an organized, well structured estate plan can be the ultimate gift to leave your loved ones. The revocable living trust is ideally suited to customize your needs, interests and desires. Many clients want to minimize all complexities when they pass away, and a properly designed trust can make it significantly easier for your family members to handle your estate after you are gone. Give them peace of mind that comes from knowing your last wishes are being carried out as you designed.

You can start the process now by making an appointment to create your own plan. We offer no-cost initial consultations for estate planning matters. After listening to your general wishes for your estate and your family, we will carefully walk you through the various alternatives. Click here for 12 Things to Consider Before Creating a Plan.

Remember, we consider your unique needs and situation. If trusts are your best option, we will tell you, but if Will-based estate plans, or other alternatives, are in your best interest, we will happily provide those as well. Ultimately, you make the decision that determines which type of plan to create.

Let us help you make an informed choice. Contact The Bell Law Firm at 913-345-2323 so we can discuss options and answer any of your questions. We look forward to assisting you in understanding all the benefits your estate plan can bring to you and your family. In the meantime, feel free to explore more topics on our blog.