Why Every Hoosier Should Consider a Trust

Trusts are powerful estate planning tools that offer significant benefits for individuals and families in Indiana, regardless of the size of their estate. While they are often associated with the wealthy, trusts can be advantageous for anyone seeking greater control, privacy, and protection over the distribution of their assets.

At their core, trusts are legal arrangements in which a person transfers property to a trustee, who manages those assets for the benefit of named beneficiaries. The terms of the trust are set out in a written document, which allows the person creating the trust, called the settlor, to specify exactly how and when assets should be distributed, both during their lifetime and after death.

One of the most compelling reasons to establish a trust in Indiana is the ability to avoid probate. Probate is the legal process of settling an estate after someone’s death, and in Indiana, this process can be complicated, time consuming, and expensive. By placing assets in a trust, those assets typically bypass probate entirely, allowing beneficiaries to receive their inheritance more quickly and with fewer legal hurdles. This not only saves time and money, but it also helps maintain privacy, as probate proceedings are public record while trust distributions often remain confidential.

Trusts also provide enhanced control over asset distribution. For example, a trust can specify that beneficiaries receive funds only upon reaching a certain age, achieving specific milestones, or even meeting particular conditions. This feature is especially helpful for families with young children, dependents with disabilities, or beneficiaries who may not be adept at managing money. In fact, trusts are commonly used to provide long-term financial security for minors or to protect the interests of individuals with special needs, ensuring that any public assistance benefits are not jeopardized.

Another major benefit of trusts in Indiana is asset protection. Certain types of trusts, especially irrevocable trusts, can shield assets from creditors and legal judgments, creating a safe haven for family wealth. This can be crucial for individuals concerned about potential lawsuits or financial liabilities. Additionally, trusts can help reduce the taxable value of an estate, potentially saving beneficiaries a considerable amount in taxes, although Indiana itself does not impose an estate tax. For larger estates, specialized trusts can be used to minimize federal estate taxes and facilitate tax-efficient transfers between spouses.

Trusts are also invaluable in cases of incapacity. If the settlor becomes unable to manage their affairs due to illness or injury, the trustee can step in to manage the trust assets according to the settlor’s wishes, avoiding the need for court-appointed guardianship. This ensures continuity and protection for both the settlor and their beneficiaries.

Trusts offer Indiana residents a robust means of protecting and distributing their assets, and providing privacy, flexibility, and peace of mind. They are particularly beneficial in situations where avoiding probate, maintaining confidentiality, protecting vulnerable beneficiaries, or shielding assets from creditors are priorities. While trusts require careful planning and clear documentation, their advantages make them an essential component of many Indiana estate plans.

If you have any questions relating to trusts and estate planning, please contact McNeelyLaw LLP by calling (317) 825-5110.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.