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Do I Need a Trust? 13 Facts to Help You Decide

Trusts are a fundamental element of estate planning, wealth management, and legal arrangements for managing assets.

  1. Ancient Origins: Trust-like arrangements have been around since Roman times. The concept of a “fideicommissum” resembled modern trusts. The trust as we know it today evolved in England during the Crusades. Knights departing for the Holy Land would leave their property in the care of a trustee to manage the estate in their absence.

  2. Variety of Purposes: Trusts are not just for the wealthy; they serve many purposes, such as asset protection, tax planning, privacy, probate avoidance, and managing funds for minors or individuals with disabilities.

  3. Irrevocable vs. Revocable: Trusts can be irrevocable, meaning they cannot be changed or revoked once established, or revocable, allowing the person who created the trust to alter it. Irrevocable trusts often have tax advantages and asset protection benefits.

  4. Asset Protection: Trusts can offer protection against creditors, lawsuits, or divorces. For instance, assets placed in a properly structured irrevocable trust may be beyond the reach of creditors.

  5. Privacy: Unlike wills, which become public documents through the probate process, trusts can maintain privacy by not becoming public records. This means the details of the trust assets and beneficiaries can remain private.

  6. Tax Implications: Certain trusts can be used for tax planning. For example, a charitable remainder trust can provide a stream of income for the donor, with the remainder interest going to a charity, which can result in a charitable tax deduction.

  7. Special Needs Trusts: These trusts are designed to benefit individuals with disabilities by managing assets for their benefit, without disqualifying them from government assistance programs such as Medicaid or Supplemental Security Income.

  8. Spendthrift Trusts: These are designed to protect beneficiaries from themselves. They prevent beneficiaries from squandering their inheritance by doling out money according to terms set by the grantor.

  9. Grantor Retained Annuity Trusts (GRATs): This is a financial instrument used in the U.S. to make large financial gifts to family members without paying a U.S. gift tax.

  10. Land Trusts: These can be used to hold real property. In some cases, they are used for conservation purposes, to protect natural landscapes from development.

  11. Trust Funds for Pets: In many jurisdictions, it’s possible to create a trust to ensure that a pet is cared for after its owner’s death.

  12. Complexity and Costs: Trusts can be complex to set up and manage, often requiring the assistance of a legal professional. They can be more expensive to establish than a will, but they may save money in the long run by avoiding probate costs.

  13. Economic Impact: Trusts hold a significant amount of wealth worldwide. They are a key part of the financial planning industry and can influence markets, especially when trust funds make large investments or divestments.

At GetDynasty, we believe trusts are for everyone and there is no better time than now to prepare for the future.  Get started for free here.

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What is a Trust?

A Living Trust is a financial tool that lets you plan, organize, and protect your life. It’s a personal entity that allows you to add assets and plan out your inheritance. Eliminating legal battles, cost, and time spent by your loved ones. 

Think of it like a personal LLC that you put everything you own in. Except it doesn’t protect you from liability like an LLC does, it protects you from probate and conservatorship. 

Probate is the complicated court process (12-18 months) where a judge decides what happens to your assets after you die, become incapacitated, or are “deemed” incapable. Creating a living trust allows your assets to completely circumvent probate and immediately transfer to your loved ones. 

In addition to being able to name heirs (your beneficiaries), a Trust also allows you to assign someone to manage it (your successor trustee). Instead of going through probate, your Successor Trustee takes control of the Trust, handles your affairs, and distributes your assets according to your instructions. The person you select as Successor Trustee should be your most trusted person. Like a best friend or closest family member.

At Dynasty, we believe everyone should have a Living Trust. If you have children, assets, or plan to acquire assets in the future, you should create a Trust. That way when you buy your next home, open a bank or brokerage account, get startup shares, etc. – you can immediately title them in your trust.