There is no “bright line rule” for determining whether a person needs a trust as a part of their planning. The answer for any particular person will depend on their own planning needs and planning goals.

While a person’s age and assets are factors to be considered in determining what kind of planning a person needs, they are not the only factors, and they’re not even the most important ones. Just as important are the circumstances of the beneficiaries, the family circumstances, and what you want to do with your assets.

As an example, we have a lot of clients who are in their thirties (and even some in their twenties) who don’t have a lot of assets currently, but they do have life insurance and young children. The estate planning we designed and implemented for these clients included living trusts to make sure that any inheritance (including any life insurance) going to the children would be protected from a Guardianship of the Estate, would be used to provide for the children in a way consistent with how the parents would use them, and then would be given to the children when they are older, more mature, and have been better judgment (instead of at age 18).

Similarly, we have clients who have estates higher than $2 million, but a majority of our clients have less than that. Estate planning (and trust planning) is more than planning to reduce estate taxes, so it’s not necessary to have several million dollars or more in order to need good, solid trust planning. While estate tax savings is certainly a major benefit of trust planning for those who need it, the benefits of trust planning go way beyond saving estate taxes. In fact, we’ve always said that estate tax savings is not the reason to do estate planning, but it can be the icing on the cake.

Here is a list of some of the non-estate tax issues that trust planning can be used to address:

• Minor Children (see above)
• Disabled Beneficiaries – If you have beneficiaries who cannot manage their own finances due to a disability, then a Living Trust should be used to allow someone else to manage those funds for them. The alternative is a Guardianship of the Estate, with its control limitations and expense.
• Beneficiaries with Special Needs – If one or more of your beneficiaries has Special Needs, and is receiving needs-based assistance from the government (whether it is medical care, disability income payments, living expenses, or any other such benefits), then a Living Trust is needed to preserve their inheritance and still maintain their eligibility for those benefits.
• Creditors – A Living Trust can be used to protect your beneficiaries’ inheritance from creditors, predators, or even a potential divorce. While assets are in trust for your beneficiaries (instead of being distributed to them directly), they can be protected.
• Immaturity, Spenders, or Addictions – Sometimes, unfortunately, we run into situations where a family member should not be given access to and control over assets. That could be because they are just younger or don’t have the experience making good decisions with money. It could be because they are “spenders” and blow through whatever amounts they have. It could be because they have a drug, alcohol or gambling addiction. In any of these cases, a Living Trust Plan can be used to protect your loved one and help preserve the assets as well.
• Blended Family – “Blended families,” with “his kids” and “her kids,” and sometimes even adding “our kids,” present special planning issues. Depending on the family dynamics, the relationships between the stepparents and stepchildren, and the planning goals, the planning can be simple or very complicated. Often, a Living Trust is the best tool to use in planning for these families.

This is just a short list of the issues that could arise when considering the type of estate plan to put together. When we sit with our clients and begin to design an estate plan, we look at all of these issues, and any others that are present, to help determine the best kind of plan for each person.