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Do I Really Need a Trust?

Do I Really Need a Trust

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By Jeff Wagoner, W M Law President

Many times, I have clients show up for an initial consultation with the mindset that “I need a trust.”  They are absolutely dead-set that they must have a trust of some sort.  When I ask why they believe they need a trust, sometimes I get a very well-thought-out response and the client is correct – they DO need a trust.

However, more often than not, the client believes he or she needs a trust because somebody else has told them that they need a trust.  Upon digging further, it is generally because either that other person has a trust or because someone in that other person’s family passed away and had a trust.  Now, trusts are wonderful things – they can be used to do many things that a simple will cannot.  And they are great for avoid probate.  But I rarely recommend them.

Why don’t I recommend them often?  Well, first off, I believe in the KISS principle – simple over complex any day in my book.  I like to figure out what the simplest method is to accomplish a given goal, and oftentimes that means we can use a simple will along with some other non-probate transfer mechanisms to avoid probate.  So, if the state you reside in allows a Beneficiary Deed (aka “Transfer on Death Deed”), then you should take advantage of that – only 31 of the 50 states have adopted Beneficiary Deeds.  Thankfully, both Missouri and Kansas (where I practice) allow Beneficiary Deeds.  A Beneficiary Deed goes a long, long way toward avoiding probate without a trust.

There are other non-probate transfer mechanisms that we routinely use that will allow us to avoid a trust.  The other thing to consider about trusts is that, like a pet, they require care and feeding – you can’t just form a trust and forget it.  You must constantly exercise care to ensure that your property remains titled in the name of the trust – which frankly can be a pain in the you-know-what.  Oftentimes, people mess up and don’t keep things titled correctly, so despite having a trust, they end up in probate anyway.

All that leads to my default setting of “if you don’t need a trust, then why have one?”