Q. Dan, now that the estate tax exemptions are permanent, do we need to keep our trust? — Steve in Satellite Beach
A. Steve, estate taxes are only one reason people set up trusts, so I wouldn’t rush to scrap yours.
The One Big Beautiful Bill Act of 2025 made several tax breaks permanent that otherwise would have expired at the end of 2025. One of them was the lifetime estate and gift tax exemption, which is now $15 million per person, or with proper planning, $30 million for a married couple. That amount will rise annually with inflation.
Of course, in tax law, “permanent” does not always mean forever. Congress can always change the rules later. But for most families, mitigating estate taxes is not the main reason to use a trust anyway. Probate avoidance is almost always mentioned but in many cases that concern can be addressed by other means. Today, I’ll highlight three other common reasons: easier management of assets, more control over how money is distributed, and protection from creditors.
A trust can make the management of your assets simpler while you are still alive should you be unable to manage things yourself. I saw that firsthand with my late parents. As they declined, having assets in their trust made it much easier for me to step in and help manage things. For assets owned by the trust, I just had to provide the simple paperwork showing I was the successor trustee.
However, not every asset can go into a trust, so a Durable Power of Attorney was also important. In my parents’ case, that document was much harder to use. No institutions would accept the document until their lawyers reviewed it. Many DPOAs are not honored after these reviews but mom and dad’s document was properly drafted and executed so we only faced a delay, not a rejection. Because most of my parents’ assets were in the trust, those delays caused fewer problems.
Good estate planning is about more than paperwork
Another big reason people use trusts is to leave assets to someone without handing them over all at once and hoping for the best. Trusts can be especially useful or even critical for minors, beneficiaries who are not good with money, people with special needs who could lose benefits, spouses that are step-parents to your biological children, or heirs whose jobs or circumstances make them more vulnerable to lawsuits or creditors.
Some professions, like medicine, naturally come with more lawsuit risk. But creditor problems can show up in plenty of other ways too. Trusts can be structured to help shield assets from many kinds of claims. A common example is concern about a future divorce. Leaving assets to an heir in trust, instead of outright, can help keep those assets better protected should that heir divorce after your death.
I am not a lawyer and do not give legal advice, but I have collaborated with attorneys on hundreds of estate plans over the years. Good attorneys are worth every cent and are more accountable than an online tool.
Good estate planning is not just about filling out forms or creating lengthy legal documents. There is some art to it. It requires looking closely at your goals, your concerns, how you want things handled, both while you are alive and after your passing, and who you want handling them. It also means working with an experienced attorney who can draft the documents properly and explain them clearly. After the documents are executed, you must make sure your assets are titled correctly and beneficiary designations line up with the plan.
So, Steve, if you went through a process that covers all of what I just described and decided a trust made sense, it probably still does. Still, this is a good time to review your plan with your financial advisor and attorney to make sure it still fits your situation and that the new law is incorporated effectively.
Dan Moisand, CFP® has been featured as one of America’s top independent fee-only financial planners by at least 10 financial planning publications and practices at one of America’s most decorated independent firms. For more info, e-mail him at dan@moisandfitzgerald.com, visit moisandfitzgerald.com or call Dan at (321)253-5400 ext. 101.
Originally published on FloridaToday. Read the original article here.