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How much money you need before a living trust is worthwhile

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How much money you need before a living trust is worthwhile

On Behalf of | Jan 4, 2020 | Estate Planning

Estate planning in Colorado is not a free process, at least, not when done right. Because of this, many people wonder how much is enough before a living trust becomes worthwhile. It really comes down to individual preference and the amount of money or ROI a person puts on peace of mind for themselves and their families.

If they have minors or other dependents in their households, then a trust may become indispensable. CNN identifies other people who may benefit from a trust more than others:

  • People who have very specific instructions on how they want their assets to be distributed after passing
  • People who need to protect their heirs’ inheritance from creditors and lawsuits
  • Owners of real estate properties, such as landlords
  • People who wish to minimize estate taxes
  • People with a net worth $100,000 or more

Forbes reminds people that living trusts are not a one-size-fits-all solution for everyone’s estate planning needs. Living trusts can be either irrevocable or revocable. As the name suggests, it determines a person’s ability to make changes later on. A person who fears for their future mental state and susceptibility to financial abuse may consider an irrevocable trust. Most people start off with a revocable trust until they are 100% sure of how they want to move forward.

One of the many benefits of trusts that parents like is the ability to spread out the distribution of assets. For instance, a couple who has a young child may make distributions to contribute to college at the start of every school year. Others may time distributions to birthdays, such as 18, 21, 25 and 30.

As CNN pointed out, $100,000 in assets is a good starting point to get a trust started. However, this does not necessarily mean just cash. It may include a mix of real estate properties, stock and other assets. Debts may also eat away at that net worth. Keep all of this in mind when deciding whether to get a living trust or not. Note that trusts may be funded over time and that it can hold non-liquid assets as well.