Do you need a Trust if you have beneficiaries on all accounts and if you have a Transfer-on-Death deed for real estate?

UPDATED: Oct 1, 2022

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Do you need a Trust if you have beneficiaries on all accounts and if you have a Transfer-on-Death deed for real estate?

All my accounts, banks and IRA have beneficiaries. I will make a Transfer-on Death deed for my house to go to my son. I do not know if I would need a trust. Thank you, Gordon

Asked on April 13, 2019 under Estate Planning, Arizona


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

No, you do not unless the purpose of the trust is to control how the beneficiaries use what they inherit from you. People tend to overuse trusts, thinking they are the way to avoid the delays and costs of probate. But as you apparently understand and have done, there are other mechanisms to transfer assets (beneficiaries on accounts; TOD) without them going through your estate or probate.
The only reasons to really use a trust for inheritance purpose is:
1) If you don't trust the beneficiaries to manage their money or assets properly, so you put them in a trust and have the trustee manage them for the beneficiaires. Example: a child with an addiction or mental/emotional problems--rather than give them money, which they may waste or spend on their addiction or be tricked out of, a trust can dole the money out to them periodically or as needed for certain things (e.g. housing, medical care).
2) If you want to make sure that only a portion of the assets go one generation (e.g. your children) while making sure that there will be assets for future generations (e.g. grand- and great grandchildren): the trust can invest assets and pay out the interest or proceeds to the children, while making sure that the principal remains to provide income for later generations.
3) For charitable purposes: instead of giving a lump sum to a charity or charities, a trust can be set up to invest and grow the money in it, while making periodic charitable gifts over time.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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