You worked hard for your money, so it only makes sense that you might want to have some influence on how your beneficiaries spend any assets you pass on to them in the form of an inheritance. At a minimum, an individual may not want an inheritance to be paid immediately to his or her heirs.
An attorney that focuses on estate planning knows that many different types of trusts can allow individuals to impose conditions upon an inheritance. One of the more common restrictions is a trust set aside for higher education costs.
Yet trusts can also facilitate a multi-generational perspective. For example, an individual may want a surviving spouse to be cared for, but the remainder of his or her estate to pass to children and even grandchildren. A trust can accomplish this long-term objective.
As increased scrutiny is paid to disability benefits programs like Social Security and Medicaid, a trust can also be a strategy for caring for a disabled heir while preserving his or her low-income eligibility.The reason is that a trust creates a legal ownership boundary between the trust principal and the beneficiary. Assets are titled in the name of the trust. In addition, the trustee, rather than the beneficiaries, controls the assets in an irrevocable trust. What all of this means is that the value of trust assets usually cannot be imputed to beneficiaries, and trust assets are usually beyond the reach of a beneficiary's creditors. Of course, the terms of the trust document must be written in a way to accomplish this objective.
A typical estate plan centered around a trust generally also includes a will. Our firm focuses on estate planning and can help you prepare a comprehensive approach that includes provisions such as a trust, a will, a health-care proxy and a living will.
Source: CNN Money, “Estate planning: Is a trust beneficial?”