Family circumstances are often what motivate people to create an estate plan. Parents worry about providing for their children, and people going through a divorce want to avoid passing property or personal authority to their former spouse.
For many people, the only estate planning document they need is a will. So long as they can provide instructions about the distribution of their property and the protection of their children, they have little else to worry about after their passing.
However, family circumstances sometimes necessitate more comprehensive estate planning efforts. An individual’s family circumstances might be the reason they decide to create and fund a trust. For example, the family situations can make trusts more useful than simple wills.
Leaving an inheritance for minor children
Children rely on their parents and guardians for everything from daily structure to financial support. Technically, minor children can’t own property until they are adults with full rights. Their parents have access to and control over most of their resources. When parents die and leave an inheritance for their children, the guardian who takes over parental responsibilities may also have control over the inheritance the parents provide for their children. A trust is a way to preserve assets for the children when they become adults and prevent a guardian from squandering their inheritance.
Starting a blended family
Individuals who have children and who marry a spouse who also has children from a previous relationship create a blended family. The dynamics in blended families can be very complex. Spouses, children and stepchildren may disagree about what is fair and appropriate when one parent in the family dies. If a parent in a blended family only has a will, their spouse or children might contest the will in probate court. A trust is harder to challenge and also provides more guidance regarding the intention behind certain decisions regarding property distribution. Starting a trust is a common decision for individuals beginning blended families.
Supporting a family member who struggles
Perhaps a parent has an adult child with special needs. Perhaps they have watched a previously healthy family member struggle with daily life because of substance abuse. Trusts can protect vulnerable family members from the dangers of a lump-sum inheritance. They can also limit the possibility of someone squandering their inheritance.
Adding a trust to an estate plan can be a smart move for people under a variety of family circumstances. The right tools can make all the difference for those who want to leave a meaningful legacy after they die.