This is a question I received on TikTok from a subscriber. He said:

“I was told don’t bother with a trust until we have the $24.5m in assets together. Why do people create trusts with less assets?”

Let’s dive in.

First, I’m not sure who you’re talking to, but if they don’t have attorney-at-law on their resume, please stop listening to them.

It’s going to lead you down a path full or mistakes and bad choices.

Second, there are TWO primary reasons people would want to create a trust without a lot of assets.

Before I get to the two reasons, though, let’s talk about what “minimal assets” means, because there is no specific definition.

The way I would think about “minimal assets” is whatever the number is that you wouldn’t mind going to your heirs when you die, outright.

Like they can go buy a boat, a car, take a vacation, burn it, and it doesn’t matter to you.

If you are at that number, you probably don’t need a trust.

Make sense?

Perfect.

Here are the two reasons people would want to create a trust without millions in assets.

The first reason people create trusts without millions in assets is to avoid probate.

What is probate?

Probate is literally the process of transferring your assets to someone else when you die.

Depending on your state it can be VERY expensive.

No matter the state, it ALWAYS takes a long time and you usually need a probate lawyer to help.

So, many people create a trust to avoid probate.

When your assets are in a trust, probate is eliminated (see my other videos for more on that).

The second reason people create trusts without millions in assests is to maintain control over assets after death.

What does this mean?

Here’s an example.

I have kids.

When I die I don’t want them to get money from me and buy Ferraris with it.

I want it to be used to give them opportunities in life they might not otherwise have (buy a house, start a business, go to a good school, etc.).

A trust allows you to do this.

You put someone in charge and tell them how distributions are to be made, and those directions are followed.

Here’s where “minimal assets” becomes subjective.

If my kids each get $100k, I’d STILL not want them to just get a check for that. I want it to be put to its highest and best use.

Make sense?

Hope it does – and those are two reasons people create trusts without millions in assest.