Wealth Transfer

7 Signs You Need a Trust in Your Financial Plan

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One common misconception in financial planning goes like this: Trusts are only necessary for the super wealthy.  True, estates over $5.45 million should probably include trusts.  But having a lot of wealth is just one of many reasons why setting up a trust can be a smart financial strategy.

Here’s a quick exercise to help you determine if a trust should be considered.

Don’t think dollars and cents.  Rather, if today you had to give away everything you own (your car, your house, your jewelry, your family heirlooms, bank accounts, investments, life insurance, etc.) could you complete those transfers without any reservations whatsoever?  Or are “ifs, ands, or buts” coming to mind?

If you find yourself hesitating or putting some stipulations around your gifts, that’s a sign you probably need a trust.

Here are 7 common “ifs, ands, or buts”:

  • I’m remarried.  So I give to my wife, but not to her children from her first marriage;
  • I stress about my daughter and her own finances.  So I give to my daughter, but not to her creditors or my son-in-law;
  • My youngest hasn’t graduated college yet.  So I want to give in equal shares to all my children after all higher education costs are paid for my youngest son;
  • I want to give everything to my family.  But I want to keep my gifts private.  The public doesn’t need to see any record of how my assets are distributed;
  • I’m worried about estate taxes.  So I give to my husband, then my kids, but not if it means more taxes when I die;
  • I have a grandson with special needs.  So I want to give to him but not if it disqualifies him from receiving government support for his disability;
  • I’d like to give something to my alma mater.  But only if I can give directly to the School of Medicine.

All these are examples of situations indicating that you should be talking to your CFP® professional and your attorney about creating a trust.  If this sounds like a lot to consider, that’s OK.  Call us.  We have these conversations with our clients quite often and can help walk you through your own goals and objectives to be sure you have a plan that aligns your personal values, vision and wealth.

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