Picture this: tomorrow an unexpected accident changes everything. Suddenly your family is left to untangle your accounts, investments, and everything you’ve worked to build. Would they know where to start? Would the money be managed wisely enough to last or could it disappear far too quickly? These aren’t exactly comfortable conversations, but they may be the most important ones you’ll ever have.
Why You Might Need a Trust in Your Estate Plan
When real assets are on the line, protecting them requires more than hope. It takes a plan. And one of the most important tools in that conversation is the trust.
The challenge? Most people never get around to creating one, or even documenting their wishes in a basic will. A 2025 survey by Trust & Will found:
- 83% of Americans say estate planning is critical, but only 31% have even drafted a will.
- Even financial professionals aren’t immune to procrastination: 1 in 4 advisors admitted they don’t have an estate plan themselves. [i]
We can’t control the future, but we can control how prepared we are. Without a plan, a variety of hazards can quickly undo decades of hard work and sacrifice. A trust may not be the right solution for every situation, but for many families, it’s the clearest way to gain control and protect a legacy.
The Big Three Threats
Without a trust (and other parts of an estate plan) in place, three forces are most likely to chip away at what you’ve created:
- Taxes – Without planning, estate or inheritance taxes can take a larger share than necessary, leaving your heirs with less.
- Probate and legal fees – If you don’t create a trust or estate plan that avoids it, your estate may have to go through probate, a court process that settles debts and transfers assets. That process can be slow and costly. It also makes information about your family’s finances and assets public, which can raise significant privacy concerns.
- Family consequences – Even strong families can fracture when larger sums of money enter the picture suddenly. Worse, inheritances can be whittled away in conflicts that can drag on for years. On the inheritance side, wealth may be wasted through poor decisions if heirs are not prepared.
Other complications may also exist, such as changes in tax laws or the need to provide for a family member with special needs. For all these reasons, it’s critical to prepare well in advance.
A Trust Can Provide Control and Relief
Fortunately, that’s where a trust can often help. Trusts can serve different purposes, but one is to give you more control over all these factors.
This isn’t just a concern for the ultra-wealthy. These types of issues can arise for any family with significant assets, whether its one million or many times more.
However, a trust may not be right for everyone. Additionally, there are several types of trusts, each with distinct uses, purposes and limitations. Here are five questions to help you determine if a trust might be worth exploring.
- Would your heirs benefit from avoiding the court process?
If your estate includes real estate or business interests, and you don’t have a trust in place, it’s likely your family will need to go through the probate process.
That means they may need court approval to access your accounts, sell property, or distribute your assets. Even simple estates can be delayed for months, especially if there are disagreements or missing documents. Probate also creates legal costs and opens up your estate to public scrutiny.
Some trusts, such as a revocable living trust, can allow assets to pass directly to your beneficiaries, outside of court. It can streamline the process and give your family faster access to what they need.
However, not all assets are subject to probate; some pass directly to beneficiaries when titled properly.
- Do you want to control how heirs receive their inheritance?
We’ve all heard stories of young heirs receiving large inheritances and spending lavishly, leaving little for future needs. But even if your heirs are responsible, you might have concerns about how an inheritance will affect their financial behavior or how outside influences could impact what you leave behind. Certain types of trusts can help you avoid these situations and help encourage responsible financial behavior.
For example, you may want to:
- Prevent a large sum from being handed over all at once, and instead provide for monthly or annual support
- Protect an inheritance from a future divorce or lawsuits
- Specify that money be directed toward education, a first home, or starting a business
A trust allows you the flexibility to establish a variety of parameters. You can delay access until a certain age is reached for younger heirs, or assign a trustee to help manage and distribute the money over time. If you’re leaving money to a charity, you can direct how those funds should be used specifically, so they further the causes you care about.
- Is your family structure complex?
Estate planning gets more complicated when there are second marriages, adult children from different relationships, or young grandchildren involved.
Without a clear legal plan, it can be challenging to ensure that everyone is taken care of as intended.
A trust can allow you to:
- Support a spouse while they are alive, while ensuring the remaining assets eventually go to your children
- Provide different amounts to different family members, depending on need
- Set up structured support for those with special needs
- If something happened to you, could someone step in?
Here’s another way trusts can help you establish more control. Suppose you pass away or get incapacitated due to illness or cognitive decline. With a trust, you can specify a person (or team) to step in and manage your affairs.
If no one is legally authorized to step in, your family may have to go to court to request permission. That process can take time, and someone you didn’t select may end up making decisions on your behalf.
A trust allows you to name a successor trustee (or even a group of co-trustees) who can manage your affairs without needing court approval. That means your bills can still be paid, your assets can be maintained, and your family can stay focused on priorities instead of dealing with things they may not be well-suited to handle.
- Could your estate be affected by upcoming tax changes?
With recent tax law changes, the federal estate tax exemption will increase to $15 million per person starting in 2026, with inflation adjustments in subsequent years. [ii] Additionally, some states have their own estate and inheritance tax provisions.
Without planning, these taxes can reduce the amount that will go to your heirs, sometimes by a significant percentage. Certain types of trusts can be used as part of a larger strategy to reduce or minimize tax liability. These strategies require upfront planning, which is why it’s critical to start now, not later.
Key Takeaway
You’ve already done the hard part: building the wealth in the first place. Now it’s time to protect it so you don’t have to worry.
At Arroyo, we apply the same level of care to estate planning conversations that we do to investment management. We’re one of the few firms serving individuals that complies with the Global Investment Performance Standards (GIPS®). This rigorous framework holds us to the highest level of transparency in reporting investment results.
You’ll get that same level of attention when you’re receiving financial planning help from our CERTIFIED FINANCIAL PLANNER® professionals. Whether we’re helping you evaluate how trusts may fit into your long term plan, or coordinating the details with your estate attorney and CPA, our goal is to help you move forward with confidence.
Ready to explore whether a trust makes sense as part of your overall financial plan?
Get in Touch
[i] https://trustandwill.com/documents/2025-estate-planning-report
[ii] https://www.dglaw.com/after-the-one-big-beautiful-bill-estate-tax-updates/
