Trusts Aren’t Just for the Wealthy: A Primer On A Power Tool to Protect Your Loved Ones

By Amy Oliver

We often see television episodes where wealthy people are depicted accessing their trust funds to keep up with their spending habits. We might imagine that trust funds are only part of the vocabulary of wealthy people. But despite what we might think, trusts are not only for wealthy individuals.

Anyone can use them to grow their wealth, protect their assets, avoid certain taxes, as well as probate, shelter money from lawsuits, and make it easier to transfer the assets that are part of their estate to their heirs.

Benefits of Including a Trust in Your Estate Plan

While it is true that many wealthy individuals use trusts as part of their estate planning, trusts can be beneficial to individuals at different income levels for a variety of reasons. Trusts can help with:

Navigating Probate Efficiently

Regardless of your wealth level, a trust can offer a streamlined way to manage the distribution of assets. Probate is the established legal process to ensure a deceased person’s assets are allocated properly. By placing assets in a trust, you can expedite this process, allowing for a swifter and more efficient distribution to beneficiaries. It’s worth noting, however, that while trusts provide numerous advantages for asset management and probate navigation, they don’t negate the importance of having a will.

Controlling Your Assets

Trusts allow you to specify how your assets are used and distributed. For example, you might want to set up a trust so that the assets are designated to be distributed over time, rather than to be paid out all at once. In addition, you could set up a trust to provide for a child or grandchild’s education.

Protecting Assets from Creditors

In some cases, assets held in certain types of trusts can be protected from creditors. This should not be a method for avoiding paying legitimate debts, but it can be a way to ensure that your assets are used as you wish.

  • Privacy: Unlike wills, which become public record once they are subject to probate, trusts can provide a level of privacy, because the details of the trust remain private.
  • Planning for Incapacity: A trust can help manage your affairs if you become disabled or incapacitated. You can name a successor trustee who is legally obligated to manage the trust’s assets in your best interest if you’re unable to do so yourself.
  • Special Needs Planning: If you have a child or other loved one with special needs, a special needs trust can be a critical tool. It can provide resources for the individual without affecting their eligibility for certain types of governmental aid, like Medicaid.
  • Tax Planning: While tax planning is usually associated with wealthy individuals, some middle-income people can also benefit from the tax advantages offered by certain types of trusts.

Of course, the costs and benefits of setting up a trust will depend on your individual circumstances, including your financial situation, your goals, and Kentucky state laws. It is a good idea to consult with an attorney or a financial advisor if you’re considering setting up a trust. Contact Berkley Oliver PLLC to determine if a trust is right for you, and if so, what type of trust best suits your needs.

About the Author
Amy E. Oliver, Esq. is an owner and attorney with Berkley Oliver PLLC. Amy has trial experience across all Kentucky Trial Courts and has handled cases ranging from misdemeanor possession, assault, domestic violence, DUI, felony theft, burglary, robbery, and murder. In March 2017, Amy left the Public Defender’s office to open Berkley Oliver PLLC with Josh. Amy has always been civically minded and that has driven her passion to assist individuals with difficult situations.  Since forming Berkley Oliver, Amy has built on this passion by working with individuals in Family Law cases through divorce, custody, and adoption proceedings.  Amy and Josh work hand-in-hand in the areas of Estate Planning, Probate, and Elder Law, with a particular focus in Guardianship work and Medicaid Planning.  If you have any questions regarding this article, you can contact Amy here.