Do I need a Trust?

Complex Estates

If you have a large or complex estate, a trust can provide detailed instructions on how your assets should be managed and distributed. This can include provisions for children from previous marriages, special needs beneficiaries, and significant assets like second homes or complex investment accounts. Trusts allow you to specify exactly what you want to happen with each asset and can authorize your trustee to delay or postpone distribution of certain assets from your estate.  This is particularly useful if you have specific wishes for how your beneficiaries should use their inheritance. For example, you can set up a trust to distribute assets gradually as a beneficiary reaches certain milestones, such as graduating college, completing a mission trip, or reaching a certain age. 

Management of Assets

Trusts can be set up to manage your assets both during your lifetime and after your death. This can be useful if you anticipate needing assistance managing your finances in the future, whether due to age, illness, or other factors. A revocable trust, for example, allows you to maintain control over your assets while providing for a smooth transition of management to a trusted individual if you become incapacitated. An irrevocable trust is appropriate in circumstances where relinquishing control of certain assets during your lifetime accomplishes a particular goal, such as asset protection or avoidance of large estate taxes.

Tax Benefits for Large Estates

For those with estates large enough to be subject to federal estate taxes, certain types of trusts can help minimize these taxes. Assets placed into an irrevocable trust, for instance, are generally removed from your taxable estate, potentially reducing your estate's overall tax burden. This can ensure that more of your assets are passed on to your beneficiaries rather than being paid in taxes.

Probate Avoidance

If set up and managed properly, a trust may enable your estate to avoid probate. Probate is the court-supervised process of distributing a deceased person’s assets, which can be lengthy and is visible to the public (i.e. requires the filing of a court action). Assets held in a trust bypass probate, allowing for greater privacy to your estate and preventing heirs from knowing what others will receive from your estate. Although the probate process in Idaho is fairly simple, avoiding probate can be particularly beneficial if you own property in multiple states, or property in a state where the probate process is more costly or cumbersome. 

Protecting Certain Beneficiaries

Trusts can protect your beneficiaries in several ways. For example, a spendthrift trust can protect a beneficiary’s inheritance from creditors or from being squandered due to poor financial decisions. Special needs trusts can provide for beneficiaries with disabilities without affecting their eligibility for government benefits. If you have beneficiaries with special needs or beneficiaries who may struggle with asset management, these protections may be necessary for your estate plan.

Special Purposes

Trusts can be specifically tailored to serve a number of special purposes. Educational trusts can invest assets to fund educational scholarships, conservation trusts can hold real property for habitat, wildlife, or other conservation goals, and legacy trusts can provide for the care and maintenance of family properties to be enjoyed for generations to come.  While these are just a few examples of special purpose trusts, they illustrate unique characteristics of asset management that may be incorporated into your estate plan.