A will plays a fundamental role in any Minnesota estate plan, but in some situations, you may have specific estate planning goals a will does not help you accomplish. A trust is another type of estate planning tool that many people use when they have certain goals in mind, with different types of trusts granting you different estate planning powers.
According to Kiplinger, creating a trust may be worthwhile if you are trying to do any of the following.
Protect a beneficiary’s public benefits eligibility
Many forms of public assistance that are available in the United States require you to go through means testing to get them. If you have a beneficiary who relies on Medicaid or other means-tested government benefits, leaving assets to him or her in your will may make that beneficiary ineligible for benefits moving forward. Leaving that beneficiary assets in a trust, however, does not.
Trusts also give you a way to manage distributions and help control the spending of any beneficiaries who may not manage money well. You have the option of telling your trustee to make distributions in small installments, or only when certain circumstances come to fruition.
Protect assets from a beneficiary’s creditors
A trust also gives you a way to leave assets to a beneficiary without potentially losing those assets to the beneficiary’s creditors. The assets you leave in a trust become untouchable to creditors.
These are just a few examples of what you might be able to do by including a trust in an estate plan and is not a complete list of all reasons you may want to establish one.