Why trusts aren't just for the rich

The idea of estate planning or trusts would seem to indicate a large home with a gated driveway full of expensive cars. But the fact is that estates can be very large or quite modest. In an era when family homes in middle class neighborhoods can be worth quite a bit of money, it could even be argued that it's all the more important to make sure that these homes are passed on to the beneficiaries of modest means alongside other important assets.

It's never too soon for young families to think about establishing a plan. While parents in their 20-30s with young kids feel they neither have the time nor the means to create a trust, there are several important services it can provide for modest and/or young families.

A great foundation for an estate plan
You can put any amount of cash, stock or real estate into a trust. You simply meet with an attorney to set up who the trustees are, who the beneficiaries are and if there are any stipulations. If there is no will or trust, the assets may simply pass on to a living spouse or closest relative, regardless of whether it's a distant cousin or a wife. Are you comfortable with that?

You get to decide
You can stipulate how the assets are used. Say you want to pass the house to the kids on the understanding that they keep it as a residence. Or they can sell the house only if they use the money for down payments on other homes for themselves. It's your trust and you can decide that. While wills go into effect once a person dies, a trust can be in place while you are still living.

Lower taxes
Trusts often are a way to pass along assets without having to pay taxes. Since the asset or assets are no longer yours, you don't have to pay taxes on them.

Avoids probate
Probate is a public court proceeding where assets are distributed to the beneficiaries. It is often an expensive process to go through that includes court fees and publication of notice in a local newspaper. It can take a long time and may get messy if the beneficiaries fight.

Protect the young or those with special needs
You may want to protect those who are vulnerable, not financially savvy or young from getting taken advantage by the other beneficiaries.

Consulting an attorney with a background in estate law is a good place to initiate the process. Every family is different, and a lawyer can help tailor a plan that is best suited for your specific situation. First consultations are usually free and non-binding, so there is no out of pocket expense.