As a single-father I am very interested in any knowledge that can be shared on this subject.
Aside from tax issues, the primary benefit of a trust is the ability to exercise additional control over your property and assets after your death. Wills generally just say who to give how much to. Understandably, many parents think that handing over their entire life savings to a 16 year old is a bad idea. A trust can let you leave someone else (a Trustee) in charge of the money until your child is older and (hopefully) more responsible. One of the largest challenges in most estate planning is that we don't know when you're going to die and we don't know what your assets will look like when you do. In this way, a trust can mitigate one problem of dying with children.
You can exercise a lot more control than that with a Trust, but I find most people are just worried about handing a huge lump sum of assets over to a young kid, and the cocaine fueled spending spree that might follow.
The downsides of a trust vary depending on the type of trust. In its most basic form, you're still looking at additional set up costs. From there, the restrictions can go up to include limited and restricted access to the assets in the trust, administrative overhead, and time to manage the assets. Very few of my clients opt for the trust, even though all those with minor children could benefit from it.
The Uniform Transfers to Minors Act (referenced in this thread) aims to solve some of the problems of a trust by allowing for ad hoc creation at the time of transfer. You don't have to set as much up, since it's mostly statutory. It's a great tool, and (at least in Montana) underused.
1. Funding college is not a concern for whatever reason.
AND
2a. You have enough assets that someone might try to sue your estate for a piece of it when you die.
or
2b. You want to make things as easy as possible for your kids on the day after you die.
First..there are many kinds of trusts...life insurance trusts, bypass trusts, crummey trusts, etc. There's a lot of possible reasons to do it/them; however, the main ones that interested me were:
* avoiding probate
* tax implications (by utilizing a trust properly, one can reduce estate taxes...for example...using a life insurance trust...you don't "own" the life insurance...so when you die, it's not considered part of your taxable estate.
* peace of mind around having things explicitly layed out. If my wife and I die, we know who takes care of the kid next and how the trust works (as far as education, giving to charity, etc.)
Hope this helps