There are many different kinds of trusts in Massachusetts, and each type has its own advantages. One thing is clear – it’s better to have a trust than to die intestate. Intestate means that a person dies without having a valid will or trust. In that situation, the state gets to decide what happens to your assets. The people you want to give your things to might get left out in the cold.
A Massachusetts trusts attorney can help you determine the kind of trust that best meets your needs and goals. Here are some of the pros and cons of setting up a trust:
A Trust Can Help You During Your Lifetime if You Become Incapacitated
A will won’t help you during your lifetime other than giving you the peace of mind of knowing that your loved ones will receive your intended distributions though probate proceedings in court. A trust in Massachusetts, on the other hand, can step in to manage your financial matters if you become incapacitated.
Let’s say that you get severely injured in a car accident and are unable to pay your bills or take care of your investments or other financial matters for a few weeks or longer. The person you name in your trust document could act on your behalf to keep your financial life going while you recuperate. As soon as you‘re ready and able to resume your money management, you can do so.
A Trust Provides More Privacy Than a Will or Intestacy
When a person dies, the will gets filed with the court and becomes a public record. If you prefer that the details of who inherits from you remain private, a trust is a better way to accomplish that end. A trust in Massachusetts is a private document that handles your estate without court intervention.
A Living Trust Can Help You Avoid Probate
If you have a will or die intestate, the court will have to oversee the payment of estate expenses and creditor claims as well as the distribution of assets to the beneficiaries. If you have a trust, your estate can avoid the probate process. Avoiding the time, work, and expense of probate is a significant advantage of a trust. Remember, an estate’s assets won’t be distributed until probate is finalized, so beneficiaries can’t get access to your assets even if they’re desperately in need of financial help.
A Trust Costs a Little More Than a Will, But Less Than Intestacy
You can get a simple will for less cost than a living trust, but if you die intestate, the expenses of intestacy can cost you far more than if you had paid for a trust. Costs of dying intestate include the regular probate costs plus the costs to locate relatives and prove the relationship to the decedent, which can require the involvement of a search firm. Every dollar spent on the intestacy proceedings is a dollar that your loved ones won’t receive.
You Can Provide for Minor Children with a Trust
If you have young children, a trust in Massachusetts is the best way to protect the assets for your minor children. With a trust, you can spread the distribution of assets out over a number of years or link the payments to specific life events. For example, you could have the trustee pay out some of the money when your children graduate from high school and some when they graduate from college. The trustee could use some of the assets to pay college expenses.
In Massachusetts, if you leave money or assets to a child under the age of 18 in a will but have not named a guardian for the property, the court will appoint one. The court will then provide strict oversight of the guardian to make sure that the inheritance is used for the best interests of the child/beneficiary. The guardian will manage the assets until the child turns 18, and then the child will receive the remainder of the inheritance. This result is often not desired by parents and grandparents since children who are 18 are not quite responsible at money management.
A Trust Can Take Care of Special Situations
Trusts can provide additional protection if you have a child with special needs or a loved one with money management problems or addiction struggles. In these cases, their inheritance could be held in trust for their lifetime and managed by a trustee of your choosing to meet the beneficiary’s needs and circumstances.
Also, an irrevocable trust can preserve some assets for a spouse who remains in the family home when the other spouse moves into a long-term care facility.
A Trust Doesn’t Exempt the Estate from Taxation
Some people mistakenly think that the estate won’t have to pay taxes if they set up a trust in Massachusetts, but that’s not the case. There are ways to use a trust to reduce taxes on the estate, but those are specific provisions that aren’t necessarily contained in a standard revocable living trust.
As an experienced Massachusetts trusts attorney, I can explain how a trust could benefit you and your loved ones and which type of trust would be best in your situation. Contact us today to schedule a free consultation to discuss how we can help you.