Chapter 10: Do You Need a Trust?
As Usual in the Law, It Depends

Nick loved his son, Claude, but didn’t trust Claude’s wife, Livia. He was afraid she’d spend the money he gives Claude on astrologers and shoes, and maybe take the money and run after Nick died. But Nick didn’t want to deprive Claude of the money he needed to run his business after Nick was gone.

So Nick’s lawyer devised a plan: Nick left the money in trust for Claude instead of making a direct gift to him, and directed that Claude get only the income, so neither he nor his wife could squander the principal. In the state where Claude and Nick lived, Livia couldn’t get at the assets if they divorced. Moreover, Nick was able to specify how much, if any, of the trust income or principal to leave Livia, or give Claude the choice. If she didn’t turn out to be a good and faithful companion, Claude could leave the whole thing to whomever he desires.

Trusts can be useful, as they were to Nick, but they’re not for everyone. If you fall into one of the following categories, you should talk to your lawyer about whether setting up a trust is a good idea for you.