With summer upon us, the changing season is the perfect time to tackle long-term priorities – like setting up a trust and estate plan to protect your family and assets. While it’s not a topic anyone enjoys dwelling on, proactive planning ensures your wishes are honored and protects your family from unnecessary stress during an emotional time. Even if you’re not personally considering a trust or estate plan, it’s worth discussing with your financial advisor and loved ones.
Trusts, a cornerstone of many estate plans, offer a highly flexible and secure way to manage and transfer assets. Here’s why they’re worth considering:
Trusts allow you to control how your assets are handled during your lifetime, if you wish, or how they will be distributed after your death, offering more options than a simple will. For instance, a trust can ensure inheritance is distributed gradually to beneficiaries, such as children or grandchildren, instead of a single lump sum that might be mismanaged. In Pennsylvania law, without a trust or a will, a standard succession plan is enacted, distributing your estate based on the receiver’s relationship to the deceased in a specified order. In some cases, if the State cannot identify any surviving immediate family, the State itself may claim your property.
By establishing one or more trusts, you can bypass these uncertainties and maintain control over your legacy.
Trusts are essential tools for families with young children, dependents with special needs, or elderly parents requiring ongoing care. For parents, a trust can designate funds for a child’s health, education, maintenance and support, ensuring their well-being is secured.
Special needs trusts, in particular, protect dependents with disabilities by ensuring they have access to resources without jeopardizing eligibility for government assistance programs like Medicaid, Disability or Social Security.
A trust can help minimize estate taxes, allowing more of your wealth to reach your heirs. Depending on the type of trust, you can shield certain assets from estate taxes, reduce income tax burdens, and strategically plan distributions to maximize tax advantages.
For example, a Roth IRA Trust ensures beneficiaries can withdraw funds tax-free if the account meets certain conditions. Meanwhile, a Charitable Remainder Trust allows you to support nonprofits, charities, and other causes that are important to you while reducing estate taxes for your heirs.
One of the biggest advantages of trusts is their ability to bypass probate, the often lengthy and public legal process required to validate a will. Probate can take months—or even years—to resolve, incurring significant legal fees that reduce the inheritance your loved ones receive.
Trusts transfer assets directly to beneficiaries upon your passing, ensuring a smoother, faster process. This privacy-preserving option also keeps personal and financial matters out of the public record.
Establishing a trust is more than just a financial decision — it’s an act of care for your loved ones. Whether you’re protecting dependents, simplifying the inheritance process, or minimizing taxes, trusts provide clarity, security, and peace of mind. This new year, take advantage of the fresh starts of the season to start a conversation with an estate planning professional.
If you have any questions about your business and planning for the future, reach out to one of our Wealth Advisors today! https://www.tompkinsfinancialadvisors.com/about-us/contact-us
This article, written by John Genn first appeared in the BCTV on March 6, 2025. You can see the original here: https://www.bctv.org/2025/03/06/trusts-in-trusts-four-ways-to-help-in-planning-for-your-familys-future/