"Maybe you want to make sure that your kids receive your money in a certain way," said Schlesinger. "Maybe you don’t want sister-in-law or daughter-in-law to be involved. Maybe you want it to jump a generation. Maybe you need a special needs trust. There are all sorts of rationales for creating a document."
Austin Frye, a financial planner based in Aventura, Florida, said his practice does more trusts now than ever, and he expects that to continue.
"They are for protective reasons and not for tax savings," Frye said. "A rise in the diagnosis of autism, special needs, drug and alcohol addictions, Alzheimer's, and other problems including multiple marriages and non-traditional relationships—these have kept our trust department busier than ever."
Another reason for trusts is to keep the state out of your affairs after you die. Property that is not jointly owned or set up to transfer directly to a beneficiary—like a bank account- can end up being evaluated in an expensive and time-consuming probate process. This often includes things like a vacation property in another state, a piece of expensive art or a stamp collection, or a stock portfolio with no named beneficiary.
"Everything needs to be in some kind of trust," Frye said.
Giving It Away
Even with the doubling of the estate tax limit, charitable trusts can help with your tax burden.
Houston financial planner Scott Bishop said that by leaving a substantial IRA to charity through a trust you can avoid the taxes your heirs would pay when they liquidate the account.
Giving appreciated stock to a charity through a trust or a donor-advised fund can bypass capital gains taxes and still offset income in the year you donate if you itemize deductions, Bishop added.
With all of these changes, planners said to keep in mind the new law sunset in 2025.