If it’s on the Internet, It Must Be True…Right? (Part II)

Rather than asking whether you have more than the arbitrary $3 to $4 million in assets, here is a better and rarely asked question to ask to help determine if a trust can help you:

If your beneficiary lost half or even all of the inheritance you left due to bad judgment, a divorcing spouse, a creditor, a bankruptcy, or to your replacement (your spouse’s next husband or wife) would it bother you?

If the answer to that question is no, then I often find that a trust is much less likely to be important (at least in Arizona), though a trust can still provide other benefits and should not be dismissed as an option without advice from your attorney.

If the answer is yes, then a well-written trust will likely be very beneficial to you and your loved ones. While the answer to this question depends on each person’s values, I haven’t met many clients who would not be bothered if upon looking down from heaven, they noticed that the $500,000 they left to their adult child was gone in six months or that their child had to give half of it to their cheating ex-spouse.

The question above is not the only input to determine whether a trust makes sense for you. People with children with special needs, those concerned with keeping their inheritance “within the bloodlines,” and those who own property in states that require expensive and cumbersome probates are a few among many examples where a trust can be important even if the answer to the question above is no.

Just because you have a trust, don’t assume it protects your beneficiaries from their bad judgment, their divorce, their creditors, their bankruptcy, or your replacement. The one-size-fits-all trusts rarely do.