In addition to providing for family after passing away, estate planning generally has two main goals -- to reduce or eliminate probate and estate taxes. Trusts are often useful in meeting these and other goals for a Washington, DC resident. The question that each resident typically needs to answer is whether a trust is necessary to meet an individual's desires.
In order to make that determination, it may be necessary to sit down and take inventory of all of the assets an individual owns. Many people will not need to use all of the federal estate tax exemption, which is $5,340,000. If the total value of a person's estate does not exceed this amount, it may not be necessary to have a trust.
Depending on how a person's assets are titled, it may not be necessary to have a trust in order to avoid probate. Several accounts and assets can be passed to an heir directly upon death. Whenever possible, it may be advantageous to use available forms to either pay an account or transfer an asset on death.
These strategies may achieve the logistical and monetary goals of an individual, but many people choose to use trusts for another very important reason -- to establish controls that will ensure an heir or heirs receive the benefit of an inheritance for years to come. Trusts do not only shield assets from probate or taxes but also from heirs that may not yet be ready for a windfall. For this reason, it is just as important for a Washington, DC resident to look at the family dynamic as it is to look at the financial considerations.
Source: Forbes, "Should You Have A Trust?", Erik Carter, Sept. 12, 2014