Estate plans can be very simple and include just a last will. They can also be very complex and involve multiple different documents. Trusts are some of the most popular inclusions in modern estate plans.
Far from being a tool only by the wealthy, trusts have many advantages that could benefit the average individual trying to structure their estate. The following three benefits are some compelling reasons to add a trust to your estate:
1. A trust can protect your property from creditors
As you get older, your care costs are probably going to increase. If you need to go into a nursing home or require aggressive cancer treatment, you could eventually end up with tens or even hundreds of thousands of dollars worth of medical debt.
Both while you are still alive and after you die, creditors could come after your property to repay those debts. Moving assets into a trust makes it harder for creditors to lay claim to them.
2. A trust could help you avoid medical debt
People sometimes wind up with unpaid medical expenses because they only have Medicare and can’t qualify for Medicaid.
Moving substantial assets into a trust at least five years before you apply for Medicaid can help you avoid any penalties for transfers and gifts that you might incur and make it much easier for you to qualify.
3. A trust can keep your assets out of probate court
Probate proceedings will likely drastically increase the cost of administering your estate. Moving major assets, like real estate, into a trust will help ensure that those assets don’t have to go through probate to transfer to your family members.
Trusts can also be helpful for those worried about estate taxes and those with family members who might misuse an inheritance. The more you know about trusts, the easier it is to decide if one would work well in your estate plan.