Your Estate Plan May Still Need a Trust

Your Estate Plan May Still Need a Trust- Most people with large estates do the necessary planning to avoid paying estate taxes. The proof: only 4,000 federal estate tax returns were filed in 2023. A recent article from The Orange County Register asks a good question: “If estate taxes won’t apply, why should you have a trust?”

There are many good reasons for a regular person to have a trust. Everyone should also have an estate plan, even if they don’t need a trust.

Having an estate plan has nothing to do with how much money you have. The estate plan is a carefully thought-out plan for incapacity and a plan to distribute assets at death. If you have minor children, a blended family, real estate, a family business, disabled beneficiaries, or if you are lucky enough to grow old, you need an estate plan.

A typical estate plan includes the following:

Power of Attorney. This document authorizes a person of your choice to be your agent or representative in case of incapacity. This is critical if someone else needed to pay your bills, arrange for assisted living, or handle other personal or legal matters.

Advance Healthcare Directive. Having an AHD in place lets someone you pick make healthcare decisions following directions in the document. You can say which life-sustaining treatments you do or don’t want, for example, whether you want pain relief, a feeding tube, etc.

Last Will and Testament. The will provides directions for how you want your estate to be distributed upon your death and appoints the person to carry out the plan (the executor). Your will also nominates a person to be the guardian of minor children. A will can establish a trust to control assets for minor children. However, it may be better to establish and fund a trust before death.

Living Trust. A trust allows you to have significantly more control over how assets in the trust are distributed during and after your life. You can direct the person in charge of the trust—the trustee—not to release any funds until your oldest child has found gainful employment or to control how much money should be distributed at certain ages. Assets in the trust do not go through probate, so the assets and your directions for them remain private.

Even if you have a living trust, talk with an experienced estate planning attorney about having a pour-over trust provision in your will. This “pours over” any assets that would otherwise be subject to probate into the trust. It’s a backup plan in case you neglect to put significant assets into the trust before death.

Once trusts are established, the next step is to retitle assets to fund the trusts. Assets moved into the trust must be retitled in the name of the trust. This typically includes a home, bank and investment accounts, and other assets. Simply having them listed on a schedule attached to your trust won’t do it, and missing this step can undo your estate plan.

Review your estate plan, including trusts, every three to five years. Tax laws change, lives change and your estate plan needs to be reviewed to be sure it still reflects your wishes. An experienced estate planning attorney can help make this a smooth and painless process. You will feel better once it’s done, as will your loved ones.

Schedule your phone consultation: THE LAW OFFICES OF CLAUDE S. SMITH, III

Your Estate Plan May Still Need a Trust

Reference: The Orange County Register (Aug. 31, 2025) “If estate taxes won’t apply, why should you have a trust?”