What Are Common Misconceptions About Trusts?
Many people have misunderstandings about trusts. These legal tools provide significant advantages for estate planning, yet misconceptions prevent individuals from fully utilizing them.
At the Law Offices of DuPont and Blumenstiel, we address these misunderstandings and help families make informed decisions that align with their financial and personal goals.
13 Trust Myths
1. Trusts Are Only for the Wealthy
One of the most common misconceptions is that trusts are only beneficial for those with substantial wealth. In reality, trusts serve individuals and families across a wide range of financial backgrounds.
They offer a way to manage and distribute assets efficiently while avoiding probate. This can be particularly valuable for families who want to minimize court involvement and maintain privacy.
2. Trusts Eliminate the Need for a Will
Many people believe that creating a trust means they no longer need a will. While trusts are powerful estate planning tools, a will remains an essential document. A will can address any assets not included in the trust and specify guardianship for minor children.
Without a will, any assets outside the trust may be subject to Ohio’s intestacy laws, which determine distribution based on legal defaults rather than personal wishes.
3. Trusts Are Only Useful for Avoiding Probate
Although avoiding probate is a major advantage, trusts offer much more than just probate avoidance. They provide control over how assets are distributed, protect assets from certain creditors, and help manage financial affairs in cases of incapacity.
They can also support charitable giving and provide for beneficiaries with special needs without jeopardizing government assistance.
4. Once a Trust Is Created, It Cannot Be Changed
Some believe that once a trust is established, it’s set in stone. While certain trusts, such as irrevocable trusts, have strict rules regarding modifications, many trusts, including revocable living trusts, allow for adjustments.
Changes in family circumstances, financial status, or legal requirements may necessitate modifications, which can often be made to better reflect current intentions.
5. Trusts Are Complicated and Time-Consuming
People sometimes assume that setting up a trust is too difficult or requires excessive effort. While trusts do require careful planning, the benefits they provide far outweigh the initial effort.
Once established, they simplify estate administration by streamlining asset distribution, reducing disputes, and minimizing court involvement. In Ohio, well-structured trusts can save significant time and expense compared to traditional estate settlement methods.
6. Only the Wealthy Benefit from Asset Protection in Trusts
Asset protection is often associated with high-net-worth individuals, but trusts can provide protection for people at all financial levels. Certain types of trusts shield assets from creditors, lawsuits, and divorce settlements. Asset protection strategies are especially important for business owners and other people that have high-risk jobs.
7. Trusts Lead to Loss of Control Over Assets
Some believe that placing assets in a trust means losing control over them. While irrevocable trusts do have restrictions, revocable living trusts allow the grantor to retain control during their lifetime.
The grantor can serve as trustee, make changes, and even dissolve the trust if necessary. This flexibility makes them an attractive option for those wanting both control and estate planning benefits.
8. Trusts Are Only for Avoiding Taxes
Although tax benefits can be a reason to establish a trust, they’re not the sole purpose. Many trusts focus on family protection, asset management, and controlled distribution of wealth. In Ohio, certain trusts can help with estate tax planning, but even those without significant tax implications can offer substantial benefits in terms of financial organization and legacy planning.
9. A Trust Immediately Protects Assets from Creditors
A common misunderstanding is that placing assets in a trust automatically shields them from creditors. While some trusts, such as irrevocable trusts, can provide asset protection, revocable trusts generally do not.
During the grantor’s lifetime, assets in a revocable trust remain accessible to creditors. Proper trust planning is necessary to achieve specific asset protection goals.
10. Trusts Are Only for the Elderly
Trusts serve individuals at all stages of life. Parents of young children use trusts to provide financial oversight and care instructions in the event of an untimely death. Business owners use them to establish succession plans.
Those concerned about incapacity rely on trusts to manage assets without court intervention. Trusts are versatile tools that benefit individuals regardless of age.
11. A Trust Ends When the Grantor Passes Away
Some assume that a trust automatically dissolves upon the grantor’s death. However, many trusts continue to operate after the grantor’s passing, managing assets for beneficiaries according to predetermined instructions. This can provide long-term financial stability, protect assets from misuse, and support ongoing family or charitable goals.
12. Trusts Make Estate Planning Too Complicated
Another misconception is that using a trust makes estate planning unnecessarily difficult. While a trust does require proper structuring, it simplifies estate administration in the long run. It reduces court involvement, minimizes family conflicts, and confirms that assets are distributed as intended without unnecessary delays.
13. Trusts Are a One-Time Solution
Estate planning should evolve with life changes. Trusts require periodic reviews and updates to remain effective. Changes in Ohio law, family circumstances, or financial situations may necessitate adjustments. Regular assessments help maintain alignment with current goals and legal requirements.
The Truth About Trusts
Trusts Must Hold All Assets to Be Effective
A trust is only effective for the assets that are properly transferred into it. Some individuals mistakenly believe that once a trust is created, all assets are automatically covered. However, assets must be formally retitled or assigned to the trust. Regular reviews help confirm that new assets are properly included, preventing unintended probate issues.
Trusts Can Benefit Special Needs Planning
For families with special needs individuals, trusts provide a way to protect financial resources without compromising eligibility for government assistance. Special needs trusts allow assets to be used for the care and well-being of a disabled individual while maintaining Medicaid or Supplemental Security Income (SSI) benefits.
Business Owners Can Use Trusts for Succession Planning
Business owners can benefit from trusts by creating a smooth transition plan for their companies. By placing business interests in a trust, owners can establish clear instructions for succession, prevent disputes among heirs, and maintain business continuity.
Trusts Can Preserve Family Heirlooms
Families who want to protect heirlooms, real estate, or other significant assets for future generations can use trusts to dictate the management and transfer of these items. This confirms that treasured family assets remain within the family and are distributed according to specific wishes.
Trusts Can Be Used for Charitable Giving
Charitable trusts provide a way to contribute to meaningful causes while also receiving financial benefits. These trusts allow individuals to donate assets, receive tax advantages, and create a lasting legacy through structured charitable giving.
Trusts Can Help Blended Families Manage Inheritance
For blended families, trusts provide a way to fairly distribute assets between current spouses, children from previous marriages, and other beneficiaries. This prevents disputes and confirms that each loved one receives their intended share according to the grantor’s wishes.
Trusts Can Provide Lifetime Income for Beneficiaries
Certain trusts, such as irrevocable income trusts, allow grantors to provide structured financial support for beneficiaries over their lifetimes. This can prevent reckless spending and confirm long-term financial stability for heirs.
Trusts Can Facilitate Education Funding
Trusts can be structured to fund education expenses for children or grandchildren. By setting aside assets specifically for tuition, books, and other educational costs, grantors can support future generations while maintaining financial control over how and when funds are distributed.
Connect With the Estate Planning Attorneys at DuPont and Blumenstiel Today
Our attorneys help Ohio residents create estate plans that meet their financial goals. We’re proud to serve Dublin, Columbus, Plain City, Marysville, Delaware, Powell, and Hilliard, Ohio. Call the Law Offices of DuPont and Blumenstiel at 614-389-9711 today to schedule an appointment.
Estate Planning and Trust Attorney, Gregory S. DuPont, JD, CFP
After I graduated from law school in 1992, I focused on estate planning and probate. As a former accounting major, the detailed financial component was a perfect fit. Beyond that, I was able to counsel my clients, help solve their problems, and serve their needs — everything I originally set out to do. It wasn’t until years later that I realized I could do more, provide more, and be more for my clients.
Back in my early years, I was working on a case that involved a trust dispute. While representing the family in a deposition it struck me that the family was ultimately burning through at least $1,500 an hour paying for all of the counsel in the room. I realized that the entire situation could’ve been prevented with proper planning, if the family just had an advisor they trusted. Although my team and I were meeting a need by helping them settle their conflict, we weren’t addressing the real issue, which was how the problem arose in the first place. I didn’t want to simply capitalize on unfortunate situations — I wanted to safeguard them from happening in the first place. So, I made a change.
I took a few years off from growing my law practice to become a Certified Financial Planner (CFP). My hope was that a broader understanding of the financial services industry and the tools of financial planning would allow me to better guide the clients at my own law firm. Thus, after gaining what I considered to be sufficient experience in the world of finance, I ultimately began to merge my financial planning, tax planning and legal practices together. Sometime later, after over 30 years in the legal industry, I decided to open a coaching business, Wealth Solutions Network, and bring my multidisciplinary knowledge to attorneys across the country. Through this network, my ultimate goal is to save a million families from excess taxation and risk before I turn 65.
I've had the pleasure of educating consumers, attorneys and financial advisors alike through regular speaking engagements and authoring multiple books.
I center my multiple businesses around education, guidance, and relationship-building. This comprehensive combination gives me the opportunity to more effectively serve both individuals and their families.
Today, my clients can give me a call and ask questions without worrying about the hourly billable factor. I describe myself as “a friend in the law". I find that this friendly approach benefits myself and my clients alike.
Outside of the office, you’ll hardly ever see me without my wife or daughter, and that’s perfectly okay with me. My clients and my family are all I need.