This trust has many names: Revocable Trust, Family Trust, Living Trust, etc. The simple trust is used in a modest estate plan where sophisticated tax planning is not needed. In the most common form, a person or a couple has a house that will need to pass on to children at death. Without a trust in place, a probate will be necessary. Why? Simply put, because it is hard to sign a deed after you have died, so someone must be given the power to do so in your behalf. The very first judges in Utah were LDS bishops who became probate judges for this reason. They were given the power to sign or appoint someone else to sign for the deceased person. If you have a trust, you appoint a Trustee (which is you while you are alive but then goes down a list of Successor Trustees after you die), so there is no need for a probate because you have already appointed the person to sign in your behalf.
This trust also has many names and includes many different forms, but the most common reason for a complex trust is to allow all of the assets to be available to a couple while both are alive but, on the death of the first spouse, to convert the trust into two parts: one which keeps a portion of the assets fully available to the surviving spouse and a portion restricted from the surviving spouse’s use except under certain narrowly drawn circumstances. Originally, this type of trust was devised by very wealthy British men who didn’t want all of their fortune to become under the control of their widows in case they remarry and are taken advantage of by “gold diggers.” Accordingly, they set up a trust giving an amount to take care of their widow but keep the bulk of the estate for their children. This type of trust morphed into a way to double the size of an exempt estate before death taxes took their bite in the 1980’s, through the 2000’s. Since 2010, the need for a tax-based complex trust has dropped as the size of an exempt estate has gone up significantly
Do you need a Trust? If you have assets that are titled, you should generally put them in a trust, which is generally easier and cheaper than waiting for a probate to go through. If you need to give special instructions for the distribution of your estate to your children because they have special needs, simply can’t deal with money, have a gambling problem, or any number of other reasons, you can give those directions to your Successor Trustees.