While you're getting your end-of-life paperwork together—your will, living will, and power of attorney—you might come across another legal tool: the trust.
But what is a trust, really? And more importantly: Do you need one?
Let's break it down.
What's a Trust?
Think of a trust like a bucket for your assets. It's a legal entity that holds money, property, or other assets, and includes clear rules about how and when those assets are used.
Here's how it works:
- You (the trustor) create the trust.
- You appoint a trustee to manage the assets.
- A beneficiary (or multiple) receives the benefit of those assets—now or in the future.
There are two main types:
- Revocable trust: You can change it while you're alive.
- Irrevocable trust: Once it's set up, you can't modify it.
Why Would You Use a Trust?
Trusts are especially useful when:
- You want to control how money is used—like paying for a niece's college or helping a loved one start a business.
- You're supporting someone with disabilities or special needs, and want to protect their access to public benefits like Medicaid.
- You're trying to reduce your estate's tax burden or navigate Medicaid's "look-back" period (which reviews financial activity from the last 5 years).
In short, a trust can provide more control, protection, and privacy than a standard will.
So… Do You Need One?
Here's the real talk: Not everyone needs a trust.
If you have substantial assets, complex family dynamics, or big charitable goals, a trust could make sense—and it's worth speaking with a CERTIFIED FINANCIAL PLANNER® or estate attorney.
But for the average Childfree person? You're probably fine with:
- A will to distribute your assets
- A living will for medical wishes
- A power of attorney for financial and health decisions if you're ever incapacitated
Setting up a trust can be expensive and time-consuming—so if you don't need one, skip the extra legal fees and focus on getting your core documents in order.