At What Net Worth Do I Need a Trust When Estate Planning?

Are You Stuck in Your Estate Planning Process?

A common question we get about estate planning is, ‘At what net worth do I need a trust?’ Many people assume that estate planning is for extremely wealthy people. But, while higher assets do make it more complicated, nearly everyone can benefit from a well-crafted plan. While we’ve covered the differences between wills and trusts before, we’d like to talk a little more about why you should establish a trust.

How Much Money Do You Need to Have a Trust?

It’s difficult to pinpoint exactly what net worth warrants a trust. But, as a general rule, if your assets are valued over $100,000, you should seriously consider one. Furthermore, if you want to be absolutely certain that your estate is distributed according to your wishes, you need a trust. Without one, your family may be forced to attend probate court and lengthy proceedings could tie your assets up for months.

But, There’s No Actual Minimum

It’s a common misconception that you need a lot of money to create a living trust, but that’s not actually true. No matter what you own or what you have in your bank account, you can create a trust as long as your assets have some value. But, trusts can be extremely complex, so it’s best to hire an estate planning attorney to help you navigate the process.

What Are the Costs of Setting Up a Trust?

If you’re aiming to create a living or irrevocable trust, it’s important to determine whether the outcome will actually be worth the cost. For example, if you’re aiming to bypass probate, you’ll want to ensure that the inheritance your heirs receive will actually outweigh the costs of the probate process itself.

1. How Complex is Your Estate?

If you only have a single home, a handful of bank accounts, and a bit of cash, the costs to set up a trust will be much lower. But, if you have a web of investments, property in other states, several homes, and active business holdings, it’s going to be much more complicated. And, as complexity grows, so do costs. So, when you’re weighing the benefits of a trust, you should factor in the complexity of your estate.

2. Trustee Fees

If your trust is complex enough that it requires professional management, you’re likely going to be paying trustee fees. In general, these fees range from 0.5% to 1.5% of the full value of the trust. However, for less complicated trusts, you can designate a family member as your trustee, which can help you completely eliminate these fees.

3. Ongoing Costs

In addition to the trustee, you may also need to pay other fees, including administration fees, management fees, and maintenance fees. So you know what to expect, you’ll want to ask your financial planner or attorney what to anticipate. An experienced professional will be happy to walk you through the process, tailor it to your personal situation, and accommodate any special needs that you may have.

What Are the Benefits of a Trust?

1. Control Your Financial Future

As we stated earlier, a trust gives you much greater control over your assets. A will indicates how you’d like your assets used when you pass. A trust, on the other hand, is a legal framework that ensures your assets are used exactly as you wish. By avoiding probate court, your heirs don’t have to bicker, battle, or wait for your assets to be distributed.

2. Protect Your Privacy

When asking yourself, ‘at what net worth should you consider a trust?’ you’ll also want to consider your family’s privacy. Living trusts are private documents that keep your net worth private. If you’re relying on a will to distribute your assets, you’re guaranteeing that those details enter the public record.

When you’re estate planning, your goal is to leave your family as much of your wealth as possible.

3. Save on Estate Taxes

When you’re estate planning, your goal is to leave your family as much of your wealth as possible. With a living trust, you’re able to better ensure that your assets are shielded from lawsuits, creditors, and debt collectors. Additionally, some trusts can be used to reduce your tax burden. Because of this, estate planning is about creating a legal roadmap to preserve your wealth, keep it private, and distribute it fairly.

Considering a Living or Irrevocable Trust?

At Wiser Financial Group, our experts will work closely with you and your estate attorney to create a trust to protect assets and avoid probate. We can help you reduce the liability of estate taxes, preserve more money, and ensure that your wealth is distributed according to your wishes. So, if you’re still not sure if you need a trust or if you have questions about the process, please reach out to us today.

Are you ready to get started?

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