The question we hope to answer today is does everyone need a trust? It seems that many people confuse the purpose of a will and a trust, but they aren’t the same thing and we’ll clarify that. Plus we’ll tell you who needs a trust and what the primary purpose of using this instead of a will.

To help us with this conversation, Matt Pastor, RICP joins the podcast again. As he’ll explain, not everyone needs a trust and the approach is different depending on the individual or couple we’re meeting with. Usually when we first meet with them, we’ll throw the question back at them to see how they respond.  

One of the most common reasons we hear is a trust will help them avoid probate. They want to make sure their funds are evenly dispersed among their spouse and kids and don’t want that going to probate. But for many people, the beneficiaries and contingents listed on retirement and bank accounts will already keep the assets out of probate.

Another reason people give for wanting a trust is to help bypass tax issues. They think that putting money in a trust will help you avoid a lot of the taxes you or your heirs might need to pay, but that’s also not completely true. In some instances, the tax ramifications could be altered to the negative with a trust.

When it comes down to it, the trust is about control. We ask people to think about their family and whether they’d be comfortable based on the current situation to have them inherit their money exactly as it is. Most of that question is directed towards the children, especially if they are younger or have special needs. The trust will allows you to ensure that your wishes are taken care of from a financial standpoint, especially in a situation like that.

Another common reason for a trust would be to protect some of your assets in retirement in case you’re worried about your health. Putting your real estate into an irrevocable trust could protect you from nursing home costs for example.

Keep in mind that the rules for trusts will vary from state to state, which is why we’ve partnered with attorneys in Connecticut, Massachusetts and even down to Georgia. We are mindful of these differences and want to make sure you’re aware of your options.

To wrap up this discussion, let’s phrase it like this. If someone asks if they need a trust, that answer will be it depends on your situation. If the question is does everyone need a trust, we’d answer that with a no.

Here’s some of what we discuss in this episode:

• Why you don’t need a trust to keep your assets out of probate.

• Can you assume that a trust will help you bypass a lot of taxes you’re going to pay.

• Common cases where a trust makes a lot of sense.

• How would this answer differ based on the state you live in?