There is no single correct way to organize your estate plan. You might employ a number of different potential strategies, each with advantages and disadvantages. That includes the use of a will. While a will has many benefits, there are scenarios in which you might want to consider using a trust instead.
Trusts, while they can be more legally complex, do offer some additional flexibility under certain circumstances. With that in mind, here are a few instances in which utilizing a trust, rather than a will, might be effective.
You want to minimize certain taxes
Taxes can take a real bite out of an estate. By putting certain assets into a trust or trusts, it may be possible to reduce some of those tax obligations. Doing so successfully requires a thorough understanding of the different types of trusts available. But it could mean the difference between selling property in order to pay those taxes and keeping the estate mostly intact.
You want to avoid probate
Probate is the legal process of administering an estate. The process, which is overseen by the courts, can take months to complete and potentially cost more money than someone had planned for, especially in the case of large, complex estates. It’s possible to set up a trust in a way that does not require certain assets to go through probate, likely cutting down the time commitment and financial requirements.
You’re looking for privacy
The probate process, since it goes through state courts, is a matter of public record. Some people may not want the outcome of their estate to be so widely known. In those cases, if property is successfully placed into a trust to avoid probate, it will also remain private – out of the public eye.
You own real estate outside Massachusetts
If you own real estate outside of Massachusetts, that property may need to go through the other state’s probate court – referred to as ancillary probate. That means more time, more documents and potentially more court costs. Because that’s often not ideal, some individuals choose to place that property in a type of trust that may be able to avoid the need for ancillary probate.
Whether a trust is right for your situation depends entirely on your goals. It’s important to remember the right answer for someone else might not be the right answer for you.