Trusts in Estate Planning: What Are They and Do You Need One?- Takeaways
By Andrea Young on July 17, 2025
At our July Empower Women event, estate planning attorneys, Liz O’Neil and Rebecca O’Brian, provided an in-depth discussion on the role of trusts in organizing, protecting, and transferring assets. Trusts are legal arrangements that allow a designated trustee to manage assets on behalf of beneficiaries, with the goal of creating clarity and efficiency in estate planning.
What a Trust Can Hold
Trusts are versatile in the types of assets they can hold, including:
- Bank account
- Investment accounts
- Real estate, whether located in Massachusetts or another state
- Personal property
It’s important to note that retirement accounts typically do not flow through trusts and require separate planning considerations.
Why Consider Using a Trust
A trust may be a suitable tool for individuals or families seeking:
- To avoid the probate process, which is public, time-consuming, and costly
- Greater control over how and when assets are distributed to beneficiaries
- Reduction or management of estate taxes, especially relevant for Massachusetts residents with estates valued at $2 million or more
- Protection of assets from certain liabilities, depending on trust structure
Types of Trusts Discussed
- Revocable Trusts Also known as living trusts, these can be altered or revoked by the grantor during their lifetime. Benefits include avoiding probate, helping with estate tax planning for married couples, and providing a structured plan for transferring assets to beneficiaries. However, assets within a revocable trust remain part of the grantor’s estate and are not shielded from creditors.
- Irrevocable Trusts Once established, these trusts cannot be easily changed. They are designed to remove assets from a person’s taxable estate and can provide protection in specific scenarios such as:
- Reducing potential estate taxes through Irrevocable Life Insurance Trusts (ILITs)
- Planning for long-term care needs through Medicaid Planning Trusts, which may help individuals qualify for government assistance while preserving real estate for heirs
- These trusts require careful planning, as the loss of direct control over assets can pose challenges if circumstances change.
- Special Needs Trusts For individuals with family members receiving government benefits, special needs trusts provide a way to offer financial support without affecting benefit eligibility. These trusts can cover specific expenses such as educational costs, home maintenance services, non-covered medical items, and household goods, but cannot provide direct cash payments to the beneficiary.
How to Choose the Right Trust
The appropriate trust structure depends on several factors, including:
• Estate size and asset composition
• Tax planning goals
• Family circumstances and beneficiaries’ needs
• Desired level of control and flexibility
For some, combining different types of trusts within an estate plan may offer the most balanced approach.
Final Thoughts
Attendees were reminded to regularly review beneficiary designations on life insurance policies, retirement accounts, and other assets to ensure consistency with their estate planning intentions.
If you’d like guidance on whether a trust is suitable for your estate plan or would like to discuss options in greater detail, please contact our team.
