Probate, Estate Planning, and Litigation

2 Reasons to Not Create a Trust Right Now

Many people attend a presentation by a financial planner or law firm and call us, believing that they need a Trust and that they need it now. However, most of these callers do not need a Trust, at least not at that particular moment in their lives.

A Trust is a powerful estate planning tool that offers great flexibility in the distribution and administration of your assets while you are alive and after you pass on. Like all tools, however, a Trust should be used properly. 


You should not create a Trust if:

1.    You will not manage it properly. (For example, if you are not going to title assets or real property in the name of the trust, keep track of trust assets, etc., then you should not create a Trust.)

2.    You have limited assets and do not have a “rainy day fund” to get you through several months without an income. (Be sure to discuss with your financial planner the amount of cash you should have available in case of an emergency.) 

In these two situations, a basic estate plan usually gives you and your family the protections you need while enabling you to continue building your savings. Then, when you are more financially secure, you can add a Trust to your estate plan.

Another option is to create a Testamentary Trust. This is good option if your personality is such that you will not manage a Trust properly. A Testamentary Trust is created by your Will upon your death when certain specified conditions exist. For example, you could specify that your children’s inheritance is to be held in Trust until they reach the age of 30. In this hypothetical, if your children are over 30 years-old when you die, the Trust is never created, and they receive their inheritance outright.

Of course, everyone’s situation is different, and you should discuss your estate planning needs and goals with an estate planning attorney.