A testamentary instrument is the cornerstone of a solid estate plan. The testator needs to establish a document discussing what should happen to their property and what support their loved ones should receive after their passing.
Many people use wills to empower trusted individuals and explain what property their beneficiaries should inherit. A trust is a legal entity created for the purpose of owning, managing and distributing resources. People might assume that a will might be the only testamentary instrument they require when, in fact, a trust might serve them better.
What are some of the scenarios that make a trust a better estate planning option than “only” drafting a basic will?
Concerns about long-term care
Some people may already know that Alzheimer’s disease runs in their families. Other people may have sustained significant injuries earlier in life that are likely to compromise their functional capabilities as they age. They recognize that they may require more support than their family members can provide in their golden years. Particularly when people do not have robust retirement savings accounts, they may not be able to afford a bed in a nursing home or in-home nursing support without Medicaid. Establishing a trust at least five years before Medicaid benefits become necessary for an older adult’s comfort and safety can help speed up the application process and reduce their likelihood of incurring a penalty.
Issues with family conflict
Maybe a testator has disinherited one of their four children due to drug use or a pattern of inappropriate behavior. Perhaps they have an adult child who is in an unhealthy marriage that might lead to divorce, and they don’t want the spouse to lay claim to any inherited property. When there are unusual family scenarios that could lead to probate conflict or the misuse of an inheritance, testators may want to establish trusts to ensure that the legacy they leave is a positive one.
Concerns about taxes
New York is one of a handful of states that collects a state-level estate tax. The threshold for New York estate taxes is lower than the federal threshold at $7.16 million in 2025. Many people with multi-million dollar estates have to consider the possibility that they could lose much of their property to state and federal state taxes after they die. A trust is a way to diminish the value of the estate and preserve resources for beneficiaries.
There are many other scenarios that could also warrant the creation of a trust. Discussing legacy goals and family concerns with a skilled legal team can help testators establish estate plans that reflect their needs and intentions.
