We cannot foretell the future… but something unfortunate could happen:
Incapacity – with no estate plan, a court will decide who will be making financial and healthcare decisions for you.
Minor children – with no estate plan, a court will decide who will raise your children.
No will – with no estate plan, your estate will pass to heirs according to state law of intestacy, with no protection that a trust can offer and perhaps to someone you don’t want receiving your assets.
Blended families – With no estate plan, your assets may not go to children of different marriages as you may have wished.
Family members with special needs – With no estate plan, a child or other family member with special needs may be put at risk for disqualification for Medicaid or SSI benefits.
Keeping things in the family – With no estate plan, your personal property and assets may wind up in the hands of a child’s spouse in the event or a divorce.
Financial security – With no estate plan, your spouse or children may not be able to enjoy a secure financial future since you would have made no provisions to protect assets.
Retirement assets – With no estate plan, you may have not designated the proper beneficiary for your retirement assets and this failure to plan could result in adverse tax consequences for loved ones.
Your business – With no estate plan, your family business may be put in jeopardy since you have not created a succession plan that would create a smooth transition.
Probate – with no estate plan, your estate could be subject to unnecessary delays and fees, and will become a matter of public record.
Life Insurance With a Trust
Regarding the consideration of your children under the age of 18. In the event that you unexpectedly pass away, a trust will hold any of the monies garnered from your life insurance policy. Without this protection, a guardianship will be created for your estate, and this can be extremely expensive. The trust allows you to choose your own “successor trustee” who will manage the trust, as well as real estate holdings, or any other assets that may be a part of your overall estate for your children. When you set up the trust, you will have the opportunity to decide what your children will have access to, and when they will get it.
Health Decisions With a Trust
Beyond the consideration of your children, the next most important reason to consider a trust is your own health and competency. A trust will allow you to avoid having a guardian appointed to you as an adult. Your trust will need to name a Power of Attorney. This will give your family the right to make decisions regarding your health, which is especially important if you become completely incapacitated. In addition to allowing family to make health decisions for you in the event of incapacitation, it also gives them the right to manage your liquid assets and work with the Power of Attorney and executor without the intervention of the court.
Avoid Time and Expense With a Trust
In addition to these benefits, a living trust can help to avoid probate if you include real property and assets under its protection. This can save your loved ones from months of tedious probate and from spending a great deal of money in court fees and the costs associated with publishing the opening of the probate.