Basic estate planning should begin with a will. However, wills do not cover all possibilities and may not be the best option for every estate, which is why many individuals, families and business owners can benefit from establishing a trust. Although estate planning is sometimes considered only for the ultra rich,1 alternatively, trusts can be useful planning vehicles regardless of age or net worth. The minimum net worth necessary for a single person to consider using a revocable living trust will vary from state to state.
Of course, if you need a revocable living trust, be sure to deposit your assets into your trust and update your beneficiary designations; otherwise, your trust will not be worth much less the money you spent on it. You may be able to benefit from a living trust even if your net worth doesn't qualify you as prosperous. Your individual net worth is consideration for a living trust, mainly if you want to hire a corporate trustee, such as a bank, trust company, or investment firm. Each state determines the net worth that can be passed on to its beneficiaries by an affidavit rather than being handled by a probate court.
Your net worth may not have to be as significant if you plan to appoint a person as a trustee, and it wouldn't be a factor at all if you form a revocable trust and act as your own trustee. I retired a few years ago and have a will and power of attorney, a reasonably good net worth, mutual funds, annuities, cash, a house without a mortgage and a long-term health policy. Estate planning can be difficult and very challenging, especially if you are a high net worth person (HNWI). Therefore, if you want your assets to pass to your heirs quickly, specifically and privately, it is worth considering a trust.
Regardless of your net worth, and particularly if any of your assets are titled in your exclusive name, you should consider a revocable living trust if you provide for the need to plan for possible mental disability. For married couples with substantial net worth, a credit shelter trust (CST) can help them or, more precisely, their heirs avoid estate taxes. Trusts can be useful estate planning tools for many people, but they may not be worth the expense for people who don't have many assets. Living trusts aren't beneficial or necessary for everyone, but they have certain uses that can make it worthwhile to have one.
Trusts are often wrongly associated with people who might have higher net worth, but trusts aren't just for rich people. The best method to determine the minimum net worth you should have to benefit from a living trust is to review state small estate laws.
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