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What Are the Benefits of Setting Up a Trust for Your Assets?

David W. Walker Attorney at Law Jan. 16, 2025

Couples discussing estate plan before signingSetting up a trust for your assets can be one of the most important steps in your estate planning process. Whether you're preparing for the future or simply want to make sure your family is taken care of after you're gone, a trust can provide a number of significant benefits. David W. Walker Attorney at Law is here to guide you through this process.

The process of setting up a trust can offer additional advantages that address state-specific concerns. Below, I’ll explore the many benefits of establishing a trust, from avoiding probate to minimizing estate taxes and offering more control over how your assets are distributed.

What Is a Trust?

A trust is a legal arrangement where a trustee holds and manages assets for the benefit of a beneficiary. The person who sets up the trust is known as the "grantor" or "settlor," while the person who manages the assets is the "trustee." 

The trustee has a fiduciary duty to act in the best interests of the beneficiaries. Trusts can be established during a person's lifetime (living trust) or through a will after death (testamentary trust).

Trusts come in various forms, such as revocable or irrevocable, each offering different levels of flexibility and benefits. While revocable trusts can be modified or terminated by the grantor at any time, irrevocable trusts generally cannot be changed once established. Regardless of the trust you choose, each plays a valuable role in estate planning.

What Does a Trust Do in Estate Planning?

Estate planning is an essential aspect of managing your financial future. A key part of this process is deciding how your assets will be distributed after your death. Without proper planning, your estate may be subject to a lengthy probate process, where the court determines how your assets should be divided. 

Setting up a trust can help streamline this process and offer several other advantages. By placing assets into a trust, you can avoid the public probate system in Missouri. Probate can be time-consuming, costly, and stressful for your heirs. With a trust in place, the transfer of assets typically happens privately and much more quickly. 

This is a particular concern in Missouri, where probate can take months or even years, depending on the complexity of the estate. Trusts often allow beneficiaries to receive their inheritance without the delay of probate.

Avoiding Probate in Missouri

Probate is the legal process that occurs after someone passes away, during which their estate is administered, and assets are distributed according to their will or, if no will is present, Missouri state law. Probate typically involves court hearings, the appointment of a personal representative, and the settlement of debts. 

This process can be time-consuming, with costs that reduce the value of the estate left to heirs. One of the biggest advantages of a trust is that it allows for the direct transfer of assets to beneficiaries, bypassing probate. In Missouri, this can be a significant benefit, especially for individuals with substantial assets or complicated estates. 

While probate isn't necessarily a negative process, it often slows down the distribution of assets, adds expenses, and opens up details of your estate to the public. A trust helps maintain privacy by keeping the distribution process out of the public eye. Avoiding probate also allows you to reap the benefits of reducing estate taxes.

Reducing Estate Taxes in Missouri

Another advantage of setting up a trust is the potential to reduce estate taxes. While Missouri doesn’t impose a state estate tax, federal estate taxes still apply. The federal estate tax exemption is set at a certain threshold, which can change over time.

If your estate exceeds this amount, a portion of it may be subject to federal estate taxes. An irrevocable trust, in particular, can be a useful tool for reducing your estate's taxable value. 

When you place assets into an irrevocable trust, you no longer own them, and they’re generally not included in your taxable estate. This means that, if structured correctly, the value of your estate could fall below the federal estate tax threshold, potentially saving your heirs from a substantial tax burden.

While Missouri doesn’t impose an estate tax, other states may, and planning ahead can help reduce the impact of such taxes on your beneficiaries. Moreover, estate planning through a trust provides the flexibility to allocate assets in a way that minimizes any estate tax obligations, making it easier for heirs to receive the full value of the estate.

Providing Control Over Asset Distribution

One of the most attractive features of a trust is the level of control it gives you over how your assets are distributed. Through careful estate planning, you can set specific terms for how and when your beneficiaries receive their inheritance. 

For instance, if you have children who are minors or beneficiaries who may not be financially responsible, you can set conditions on how the assets are distributed to them. Trusts can be used to:

  • Delay distributions until a certain age or event (e.g., turning 25, graduating from college, etc.)

  • Set up staggered distributions, providing beneficiaries with smaller amounts over time rather than a lump sum

  • Specify how the assets should be used, such as funding education, purchasing a home, or starting a business

  • Protect beneficiaries from creditors or divorce settlements by keeping the assets within the trust

This level of control is especially beneficial for those who want to make sure their heirs use the inheritance responsibly or for a specific purpose. Unlike a simple will, a trust allows you to set guidelines that are legally enforceable, seeing that your wishes are carried out as you intended. Furthermore, trusts can also help protect your assets from creditors. 

Protecting Assets from Creditors

When you transfer assets to an irrevocable trust, you no longer technically own them, which means they’re not considered part of your estate for purposes of creditor claims.  This is an important consideration if you're concerned about protecting your wealth from lawsuits, divorces, or creditors.

In Missouri, where asset protection laws are particularly favorable for irrevocable trusts, this can offer significant peace of mind. The assets placed in the trust may be shielded from legal judgments or other claims, which can be crucial in protecting your family’s wealth, even if you’re no longer in a position to do so yourself.

Trusts as a Tool for Incapacity Planning

Another benefit of a trust is its ability to address potential incapacity. If you become incapacitated and are unable to manage your affairs, a trust can provide a clear path for your assets to be managed without the need for a court-appointed guardian or conservator. 

This can be especially important in Missouri, where the process for appointing someone to manage your financial matters in the event of incapacity can be time-consuming and expensive.

By naming a successor trustee in your trust, you’re making sure that someone you trust will step in to manage your financial affairs if you're no longer able to do so. This eliminates the need for court intervention and gives you more control over who will manage your assets during your lifetime and after your death, effectively avoiding familial disputes.

Avoiding Family Disputes

Family conflicts over the distribution of assets are a common issue in estate planning. These disputes can be costly, emotionally draining, and time-consuming, especially if the deceased person’s wishes are unclear. 

A trust can help prevent these types of disputes by providing clear, written instructions for how assets should be distributed and by naming a trustee to manage the process. By doing so, a trust can minimize the chances of disagreements among family members, providing a smoother transition of assets.

In Missouri, where family disputes over inheritance aren’t uncommon, setting up a trust can help address any potential issues before they arise. The clarity and structure provided by a trust can reduce the likelihood of confusion or resentment, making it easier for your beneficiaries to follow your wishes without conflict.

Setting Up a Trust in Missouri

Setting up a trust in Missouri is relatively straightforward, though it’s still important to work with someone who’s familiar with Missouri state laws. While Missouri has simple procedures for creating a trust, it’s still important to consider the nuances of your specific situation and how best to structure the trust to meet your goals.

It’s worth noting that Missouri allows for "pour-over" wills in conjunction with trusts. This means that any assets not already placed in the trust at the time of death will automatically "pour over" into the trust, seeing that everything is covered. This can be helpful for individuals who may not have placed all their assets in the trust during their lifetime.

Enlist the Support of a Reputable Attorney

If you're considering including a trust as part of your estate planning strategy, it’s important to consult with a professional who can guide you through the process and help you determine which type of trust will best meet your needs. I serve clients in Columbia, Missouri, as well as Jefferson City, Fulton, and Boonville. Reach out to my firm, David W. Walker Attorney at Law today to get connected.