Trusts can be extremely useful but you should not create one when it’s not necessary. Depending on your circumstances, you might not need a trust for avoiding probate and smoothing the transition in case you become incapacitated.
Jointly-held property goes directly from one co-owner to the other. Insurance proceeds and retirement funds go to named beneficiaries. Such assets don’t go through probate; nothing in a will or trust can alter this disposition. Thus, if your estate is likely to consist mainly of an IRA, a life insurance policy, and a jointly-owned home, you won’t need a trust to avoid probate or incompetency.
If you do create a trust during your lifetime you must transfer assets into your trust. Creating a trust is only half the battle. Assets must be re-titled so that they belong to the John Smith Trust, not to John Smith. If assets aren’t transferred into the trust, they won’t get the protection offered by the trust. Assets acquired after the trust is created should be transferred into the trust as soon as possible.
