Is a Trust Necessary?

Indiana Trust Lawyers and Kentucky Trust Attorneys

Is a Trust Necessary?

In Indiana and Kentucky, for those who have modest estates and wish to distribute all of their assets at the time of their death, a will may be sufficient for estate planning purposes.  For those who have more complex estates (such as business assets, real estate with significant equity, and intellectual property assets), or assets worth more than $1 million, a trust may additionally be desirable.   A trust may also be desirable for those who may die with significant assets and minor children.

Trusts and Tax Planning

Historically trusts could be desirable from a tax planning perspective, especially as the amount of an estate exempt from taxation varied from year to year.  Prior to the end of 2012, the exempt amount was to be reduced to $1 million per person; however, Congress enacted laws that raised the exempt amount to $5.25 million per person beginning in 2013.

As a result of this increase, many individuals who would have benefited from having a trust for tax minimization do not need a trust solely for such purposes.  Individuals and couples who do have significant assets (perhaps $2 million or more including life insurance) should consider having a trust drafted, particularly those who have financial assets (such as stocks) that may appreciate considerably.

If you have significant assets, we can review the nature of your estate and help you determine whether a trust might be beneficial for your tax planning objectives.

Indiana and Kentucky Spendthrift Trusts – Trusts to Benefit Minors

A trust is created by the transfer of property from an individual or couple (called the grantor) to a trust.  Usually, grantors transfer most or all of their assets to a trust, and the trust assets are used to pay for their needs during their lifetime.  Upon death, the trust documents specify how the trust assets will be distributed to the trust beneficiaries.

When parents have significant assets (including life insurance) and young children, they usually want to ensure that if they die prior to their children reaching adulthood, their assets will support their children until the children are adults.  “Spendthrift trusts” can be used to limit distributions to children prior to the time that they attain a specified age (such as 25), and to pay for the expenses of raising children until such time.

Prior to such time, the trustee of a spendthrift trust is limited in terms of how they can distributed trust assets – usually trust assets can only be used for items such as ordinary living expenses, education, and healthcare.  Children are then prevented from receiving large sums of money that might be spent foolishly, and when they reach the age specified in the trust, they then receive a larger payment.

We Prepare Trusts for Southern Indiana and Kentucky Clients

We invite you to call us to schedule a meeting to learn more about whether a trust is right for you.  We can discuss how trusts may be helpful given your particular circumstances.

We also prepare Special Needs Trusts for family members who have a disability or other special needs, and Miller Trusts to protect your loved ones State and/or Federal benefits.