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Why Have Trusts Become So Popular?

By Seth Mattingly, Esq.

       Over the last five years or so, trusts have grown in popularity. Many of our clients are convinced that they need a trust, regardless of net worth or other factors. While trusts are extremely valuable and powerful documents, some of this popularity has been driven by erroneous information in the media. So, what are the genuine factors driving trust popularity?


       One of the most important features of a trust is avoidance of probate. Since probate can be both expensive and frustrating, many clients prioritize skipping it entirely. It is also worth keeping in mind that trusts remain private – since probate is being skipped, there are no publication requirements associated with a trust. This can be hugely valuable for clients who value their privacy or fear that family tensions would be inflamed if the terms of their estate plan were revealed. 


       There are also potential tax savings tied to trusts. For example, a married couple can create a community property trust to blunt the impact of capital gains taxes on jointly-held assets. Additionally, trusts can provide minor protection from creditors, especially where spendthrift provisions are in use.


       While these factors have stoked the popularity of trusts, there are a couple of negatives to keep in mind when determining whether a trust is right for you and your family. First, since trusts are much more complex than wills, they cost more up front. These initial costs can be a determining factor for many clients. Second, diligence is required to run a trust correctly (i.e. assets need to be retitled and carefully tracked). So, it is important to weigh both the potential benefits and the drawbacks of using a trust, and ultimately, the best choice for one person will not necessarily be the same for another. 

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