A simple will works for some people, but maybe not for you. Are you in a second marriage? Have minor children? Are you concerned about fraud? These are just a few of the many reasons to consider a trust.

There are some simple estate planning techniques that you can use, such as adding beneficiaries to your retirement accounts or adding transfer on death (TOD) designations to after-tax accounts. When you pass away these assets will avoid probate and can be transferred directly to the listed beneficiary. Once the beneficiary receives the proceeds, they can do whatever they like with the funds.

If having assets distributed outright to a beneficiary could cause potential problems, there are several reasons to think about creating a trust.

Conditions on Distributions

If you prefer to place specific conditions on the funds, you should have a trust in place. Many trusts state distributions can only take place at future ages – for example one-third of the inheritance received  at age 30, one-third at age 35 and the rest at age 40. Some clauses require that the beneficiary pass a drug test or have stable employment before the trust will pay out.

Trusts can be especially important with second marriages where one spouse wants to leave their assets to their kids and not their stepchildren. For example, a client with a large IRA may want to pass the account to his wife for use during her lifetime, but through a trust, which ensures that the remainder of the assets go to his kids or whichever beneficiaries he has chosen prior to his passing. If he leaves the account outright to his wife, she has the ability to add whomever she chooses as beneficiary and ultimately bypass his wishes.

Creditor Protection

If your profession has a high probability for liability, having assets passed down in trust (once the trust becomes irrevocable) may shelter funds from being attached in a lawsuit. This can be very specific with respect to state law and the type of lawsuit, so discussing this with your attorney before making any decisions is advisable.

Passing Funds Outside the Estate

For large estates that are expected to grow even larger, creating trusts during your lifetime and gifting assets can remove the growth from your estate and lower future estate taxes. If your estate is likely going to be higher than the exemption (currently at $12.06 million per person for federal estate taxes, but often much lower than that for some states) and you have more funds than you need to live on, funding an irrevocable trust now may be beneficial. Also remember, revocable (or living) trusts become irrevocable on your passing, so anything in the revocable trust will be out of the beneficiary’s estate.

Complex Beneficiaries

If you have many beneficiaries in different proportions and want to specify who gets what – for example if you have four children and you want to leave 25% to each child but if a child passes away their share goes to specific charities – you may need to use a trust. Also, if you want to leave one beneficiary a specific amount, this can get complicated. Sometimes custodians will review and accept complex beneficiary requests, but they usually have to be reviewed and modified by their legal department.

Minor Children

Trusts are important when minor children are involved because you are also going to require a legal guardian for the child, who may also be in charge of the funds. Since minors cannot own assets outright you would want to make sure the funds are protected. The trust should specify your intentions for the funds and the conditions so the child (or the guardian) cannot be frivolous with the funds. If you leave the funds outright to the minor, the guardian can easily spend those funds or list their own beneficiaries.

Providing for Grandchildren

If your intention is to provide for grandchildren on your passing, or you don’t trust the parents to set inheritance funds aside for their kids, creating a trust for the grandkids (or future grandkids) is an option. If you leave assets outright to their parents there is no guarantee that the funds will trickle down.

Protect Against Fraud or Beneficiary Changes

There have been multiple stories of elder abuse and fraud. Older people can be coerced or tricked into updating their beneficiaries when they are in the hospital or under hospice care. If the elderly individual is able to sign a form and their signature matches what is on file at the custodian and they have no immediate family to catch the update, this can be problem. Updating a beneficiary is much easier paperwork than updating an entire trust, which requires the help of an attorney. If the elderly person is not of sound mind the attorney will likely be able to notice something is wrong compared to submitting a beneficiary form to a custodian directly.

Special Needs Beneficiaries

If you have beneficiaries who are incapacitated or require special care due to mental or physical disability, setting up a special needs trust may make sense. These trusts if set up correctly should not interfere with government benefits or disability payments.

Speak to your estate attorney about your individual situation and your intentions so they can guide you on how to protect your assets and your wishes.