To Trust or not to Trust

I cringe every time I hear,

“My friend told me I need a trust.”

Like it’s some kind of silver bullet. 

Trust gets thrown around like it’s one thing.

It’s not.

A revocable trust is about control and simplicity.

You still own the assets.

You can change it anytime.

It helps avoid probate, keep things organized, and plan for incapacity.

It does not provide asset protection or reduce estate taxes.

An irrevocable trust is about strategy and tradeoffs.

You give up control.

In return, you may get asset protection, estate tax benefits, and more intentional wealth transfer.

Very different tools.

Many don’t realize:

The federal estate tax exemption is roughly $15M per person, $30M for a married couple.

Which means…

Most people don’t have a federal estate tax problem to solve today.

But where you live matters.

States like MD and DC have much lower estate tax exemptions (closer to ~ $5M). 

So for many families in the DMV (minus our friends in VA), estate tax planning becomes relevant much sooner. 

It’s also worth noting that the face value of life insurance is included in your gross estate, which can quickly push families over those thresholds without them realizing.

Revocable trust = will substitute or complement.

Irrevocable trust = advanced planning for estate tax reduction, asset protection and wealth transfer.

Saying “you need a trust” is like saying,

“You need insurance,” without asking what kind.

Same word.

Very different outcomes.

Ever been told you need a trust without an explanation why?