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How to know if you need a trust in your estate plan

On Behalf of | Nov 11, 2023 | Estate Planning

Having a will isn’t always sufficient when seeking to achieve one’s legacy goals. People in a host of different situations might benefit from creating additional estate planning paperwork.

For example, trusts have become some of the most popular inclusions in modern estate plans. There are an assortment of different types of trusts that can prove useful to people in a variety of different personal circumstances.

How can someone evaluate whether or not they should add a trust to their estate planning documents?

Assess their net worth

One of the more common reasons for people to put together trusts is to avoid estate taxes. Although Ohio does not collect estate taxes, federal state tax rules apply when someone dies in the Buckeye State. If real property, business holdings and other assets could be worth more than $12,920,000, individuals may need to consider adding a trust as a way to eliminate their estate tax risk. On the other hand, those who do not have much property in their names but do have a sizable amount of debt may also want to consider adding a trust to their estate planning paperwork as a way of protecting certain resources from creditor claims.

Consider their health

Another common reason for people to draft trusts is concern about Medicaid eligibility. Medicare won’t necessarily pay for all of someone’s treatment needs later in life. If someone needs to move into a nursing home or requires skilled help in their home, Medicaid benefits may be the best option for paying for such support. Those who wait too long to plan for Medicaid eligibility often end up subject to large penalties that leave them without access to care when they need it the most. Someone who creates a trust ahead of time may have an easier time qualifying for benefits if their health declines.

Take family circumstances into consideration

Some people can easily recognize that their family would benefit from a trust. They may have a loved one with a disabling medical condition who wouldn’t be able to handle an inheritance on their own. They might also have loved ones who struggle with addiction or who are in unhealthy marriages. Trusts can keep assets away from abusers and provide structure for those who are incapable of managing their own resources. Trusts can also help reduce family conflict, especially as it applies to someone’s estate plan. It is usually more difficult to contest a trust in probate court than it is to contest a will.

Families with a history of higher levels of conflict may benefit from trusts and other, more robust estate planning efforts. Understanding when trusts can be particularly useful may help people integrate the most effective documents into their Ohio estate plans.