Bank Of America Debunks One Widespread Myth About Trusts

A typical financial picture may include home equity, an employer-sponsored retirement account, a life insurance policy and perhaps a car loan that has yet to be paid off.

For most people, that list feels too modest for anything beyond a basic will, so establishing a trust sounds like expensive overkill.

Bank of America Private Bank says that instinct is one of the most damaging myths in personal finance, and a new national survey backs it up with hard numbers.

The bank argues that a trust’s most useful function for most families is keeping the household intact when a crisis hits.

Bank of America names the belief holding families back

Jennifer F. Galvagna, Managing Director and Head of Trust, Estates, and Tax at Bank of America, called the idea that trusts serve only the ultra-wealthy a misconception in the firm’s analysis.

Trusts give families a say in how wealth is managed and used across multiple generations, she explained, regardless of whether the estate is large or modest.

The bank’s analysis outlined five ways a trust can play a role beyond estate-tax planning: 

• Setting parameters for how an inheritance is spent across generations, 
• Preparing for incapacity through a successor trustee, 
• Easing business succession, 
• Providing for family members with special needs, and 
• Managing blended families where children from different marriages have competing claims.

Several of those functions address risks that grow more urgent as families navigate aging, health setbacks, or complicated family structures.

New survey data reveals how deep the misconception runs

The Trust & Will 2026 Estate Planning Report, a national survey of 5,000 adults, found that 27% of Americans without a will or trust say they skip planning because they believe they do not have enough assets to justify it.

That belief ranked as the single most cited barrier to action, ahead of procrastination at 23%, not knowing where to start at 17%, and cost concerns at 15%.

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The data is particularly striking among baby boomers, 35% of whom cited insufficient assets as their reason for inaction. Despite holding significant home equity and retirement savings, many in this generation remain inactive.

Overall, 56% of American adults currently have no estate planning documents, and 73% acknowledge that estate planning is personally important to them, the report found.

How a revocable trust protects families at every income level

A revocable living trust lets the person who creates it continue to manage their own assets while they are alive and healthy, Bank of America’s analysis explained.

If the grantor faces a health emergency, a successor trustee named in advance can generally step in without a court proceeding, though contested designations or disputes over the grantor’s capacity may still require court involvement.

Assets held inside a trust also bypass probate, the court-supervised process that distributes property to heirs after death.

Probate costs commonly run in the 3% to 7% range of gross estate value, according to AARP’s Smart Guide to Estate Planning, and can take a year or longer to resolve depending on the state.

On a $300,000 estate, those costs can still add up quickly. Attorney fees, court costs, and administrative expenses could total roughly $9,000 to $21,000, costs that a funded trust could avoid entirely.

Why annual reviews matter for existing estate plans

Even families who move past the “not enough assets” assumption and create an estate plan often stop there. Bank of America’s trust officers say a document that is never revisited can drift out of step with the family it was designed to protect.

Kevin Hannant, a market trust executive at Bank of America Private Bank in Los Angeles, said families should ordinarily review estate plans about once a year.

Certain life events can push that timeline forward, including a divorce, the birth of a grandchild, a period of economic volatility, or a significant change in tax law, Hannant noted.

Beth Pinsker, a certified financial planner and financial planning columnist at MarketWatch, told CNBC that the math on estate planning consistently favors doing it while alive rather than leaving heirs to sort out an unplanned estate later.

Whatever you pay today is less than what anybody's going to pay after the fact if you don't have a will. It's going to cost so much more for your heirs to deal with your estate after the fact

The Trust & Will survey found that 14% of people with a will or trust have never updated their documents. Another 13% review their estate plans only once a decade or less.

What trust skeptics may be overlooking about their own plan

The question is whether the current plan addresses the risks most likely to surface in an ordinary family.

If an estate plan relies solely on a will, it may not address incapacity during the grantor’s lifetime or probate costs and delays after death.

It also may not provide detailed control over how and when beneficiaries receive their distributions, Galvagna noted in Bank of America’s analysis.

Bank of America Private Bank’s analysis framed the question worth sitting with as whether a family’s current plan would withstand the scenarios it is most likely to face. Those are the very risks the bank says the “not enough assets” myth can cause families to overlook.

Those could include a sudden health decline, a contentious probate process, or an inheritance reaching a beneficiary who is not yet ready to manage it responsibly. 

Related: Charles Schwab warns Americans on major estate planning problem