Trusts Estate PlanningFor many people, the idea of a trust triggers the seemingly negative image of spoiled children, living off the wealth they inherited; wealth these ‘trust-fund babies’ didn’t earn.  While that may have been true in the past, trusts such as revocable living trusts have become a staple of comprehensive estate planning for far more than just the super-rich.  Trusts can be an extremely useful tool to not only accomplish many goals, but also avoid the ‘tricks’ that can befall us:

  • TRICK:  An incapacitating event leaves you unable to manage your financial affairs, and you haven’t appointed a durable power of attorney to manage them in for you.
  • TRUST:  Trusts can be used to provide an efficient mechanism for the management of an individual’s assets during his or her lifetime, even if the trust creator loses capacity.  Funding the trust, which is the process of transferring or re-titling assets into the name of the trust, gives the appointed successor trustee the power to take over management of the trust assets.  Plus, you can define what constitutes the incapacitating event.

 

  • TRICK:  After your death, your family learns they must now navigate the county court system to properly pass your assets to your heirs.
  • TRUST:  Trusts can avoid the necessity for probate administration of the assets owned or titled in the name of the trust.  While the administration process is not complicated, it does require a certain level of familiarity.  Administration can also be inefficient and costly.  Properly funded trusts can minimize and even avoid the administration process.

 

  • TRICK:  The administration of your estate in the county in which you live is a public process.  Assets, account values and other personal information about you and your estate  are openly available to the general public.
  • TRUST:  Privacy.  Trusts, at their most basic level, are like personal contracts, and since trusts can result in avoidance of administration, the terms of these ‘contracts’ are not public record.  This means only you, your trustee and your beneficiaries are aware of the terms, assets and holdings of the trust.

 

  • TRICK:  Assets left for the support and benefit of your heirs are gobbled up by creditors or unsavory people who manipulate and influence them.
  • TRUST: Protection.  While revocable living trusts have limited creditor and tax protections during your own lifetime, such trusts can be constructed to provide significant creditor or tax protections for the beneficiaries.  Notably as this relates to minor (and sometime adult) children, trusts can give you a certain level of post-mortem control over how the trust assets are distributed and protect the assets from mistakes that children sometimes make.

At this time of year, most people enjoy a “trick” or two.  But when it comes to your estate and what you want to leave for your family, tricks like the ones above are not enjoyable.  Luckily, trusts provide an efficient and inexpensive means to avoid tricks that negatively impact your family.  Don’t be tricked this holiday season; talk to your estate planning attorney about trusts and other options to address your family’s needs.