Believe it or not, you can set up a trust even if you don’t have tens of millions of dollars stashed away. In fact, there are some cases where it might be advantageous.
Trust Funds for the Rest of Us
If you leave behind a will, the text of the document will become public record for anyone to read. However, if you set up a trust, where your money goes will remain a private matter except in rare situations—like if someone sues your estate. It’s still a good idea to have a last will and testament in case you have financial assets you don’t have a chance to put into the trust before you pass away, but each line item won’t have to be quite as explicit.
Save Your Loved Ones Time and Stress
Wills go through probate court, which can be a long process. That means your family or other beneficiaries may be sitting around for a while before they actually have access to the money you left them. This isn’t ideal for anyone, but it’s particularly painful if you were the primary breadwinner.
You Don’t Trust an 18-year-old with a Lump Sum
If you think there might be a chance that a young adult would blow through the money you leave behind for them—even if you intend for it to last for years—setting up a trust may be a good idea. It allows you to slowly disburse the money rather than giving it all in one lump sum.
How Much Money Do I Need to Set Up a Trust?
There is no set dollar amount you must have in order to set up a trust, but there may be a tipping point for your personal finances. You can set up a free trust using the Tomorrow app (which we highly recommend!), but if your financial situation is a bit more complicated, an estate attorney will be necessary. An estate attorney who can go through your assets with a fine tooth comb, accounting for laws in your state and locality. To hire a lawyer, you will have to pay a fee upfront. This fee is usually somewhere between $800-$3,000.
Other fees you’ll want to account for are those charged by your financial institutions and third-party trustees. Your bank fees will be the same as what you’re paying now; the accounts in your trust should be low-fee to save your estate money after you’re gone, but also to save you money while you’re alive and well.
Third-party trustees are those who distribute your estate, but aren’t necessarily your friends or family. They do this professionally. A common scenario where you’d use a third-party trustee is if you have a special needs child and want someone to watch after their financial and medical needs, but you don’t necessarily have a close friend or family member who is able to help in this complex capacity.
If — after accounting for legal, banking and potentially third-party trustee fees — you’re comfortable with the amount of money you’re spending versus how much you have set aside for your inheritors, then go ahead and enlist the help of a lawyer.
If privacy, the stress of probate or leaving money to a young adult concern you, but you don’t have the resources to hire a lawyer, Tomorrow does offer a basic, revocable living trust and pour-over will. Just keep in mind that if at any point you can sit down with an attorney, their services are worth the fee!