Estate Planning and Trusts are not mutually exclusive.
When people start their estate planning they often ask the question “do I need a trust?” Trusts are excellent estate planning tools, but they are not right in some circumstances and perfect for other.
When you create an estate plan and trust you do so for a specific reason. For instance, in your estate planning and trusts you could create a trust for the care of your elderly mother. This trust would be created as a legal entity in your state. You will appoint a trustee (could be you) that will control the trust.
Then a bank account is opened in the name of the trust. You will fund the trust by putting money or assets into the trust accounts. Then every time your elderly mother needs something, it is provided by the money in the trust.
Whether you are alive or not, the trust would take care of your mother.
There are also many different types of trusts. For instance
and the list can go on and on.
Discussing each of the types of estate plans and trusts and the pros and cons of each is a little beyond this discussion. If you have a large estate, lots of wealth, or something specific you want to accomplish, you might consider a trust.
Only an attorney can advise you on this but you will want some basic knowledge before having that meeting.
There are innumerable reasons people create trusts. Some of those reasons are:
To keep the estate private. Wills are filed in the court and go through probate. They are public documents. If your assets are in a trust and you die, the trust does not have to deal with probate.
Trusts can be used as a tool to reduce estate taxes.
If you have property in different states, a probate would have to be opened in each of those states upon your death. A trust can help you avoid that.
A trust can make sure a special needs child or disabled person is cared for after your death.
A trust can help heirs manage the money they are left.
Trusts are not for every situation. And they can create certain problems. For instance, you have the situation where a family member is in need of Medicaid qualification for long term nursing care. A trust is considered an asset and will disqualify that person from Medicaid planning.
Be sure to consult your attorney if you have something you think might qualify for a trust. It can be an excellent planning tool when used in the right circumstances.