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How trusts help you accomplish specific estate planning goals

On Behalf of | Aug 16, 2022 | Estate Planning

Most California residents who take the time to create estate plans include wills in those plans, but far fewer also establish trusts. Yet, there are many specific estate planning goals you may accomplish with a trust that a will does not enable you to do.

According to Kiplinger, a trust is a fiduciary arrangement that involves you placing assets inside and then having a trustee manage and oversee the distribution of those assets. The trustee you appoint has a duty to exercise reasonable care to ensure your wishes come to fruition when managing the trust. What are some of the things you might want to do with a trust that you would be unable to do through a will?

Protect assets from a beneficiary’s creditors

If you leave a beneficiary assets in a traditional will and that beneficiary has creditors coming after or judgments filed against him or her, those assets may be in jeopardy. Yet, by leaving that beneficiary assets in a trust, you are safeguarding them from a beneficiary’s creditors, because those creditors are unable to touch the assets in a trust.

Protect beneficiary public benefits eligibility

Trusts also offer benefits if any of your beneficiaries are recipients of means-tested public benefits, including Supplemental Security Income or Medicaid. Recipients of these benefits have to prove financial need. If you give a recipient a major windfall in a will, it may make that beneficiary unable to collect public benefits any longer. However, leaving that beneficiary assets in a trust gives you a way around this.

Many people also create trusts to hold life insurance policies or manage assets that might be tough to divide, among other common reasons for doing so.