DO I NEED A TRUST OR IS JUST A WILL OK?

The best answer is: it depends. A trust is a wonderful tool that brings a lot of peace of mind, but it may not be right for your individual situation.

What is a trust?

A trust is an entity that holds assets for your benefit and the benefit of beneficiaries. The trust document defines the powers granted to the trustee (the person who executes terms of the trust) and the parameters by which assets are distributed.

Trusts are versatile in that they allow for very tailored planning for a disability during your life and asset transfers after your death.

Do the instructions in the trust document apply to all of my assets?

The instructions in the trust document only apply to any assets owned by the trust. Assets must be titled into the name of the trust to be subject to the terms of the trust document. Therefore, trusts require a bit of work when they are created to ensure that assets are retitled appropriately.

But, it is important to note that assets retitled to the trust are managed exactly as they were before and remain under your complete control as the trustee. Once you die or become incapacitated, your named back-up (successor) trustee becomes responsible to manage the trust assets according to your wishes in the trust document (no court involvement required).

What should I consider in deciding if I need a trust?

Those who want a simpler initial process when creating an estate plan and who do not seek the other benefits of a trust may choose to simply execute a will. Wills do serve an important purpose, though they have some disadvantages to a trust (see the graphic at the bottom of the page).

A major disadvantage associated with wills is the probate process that most estates must adhere to.

Many people choose to establish a trust if they have minor children, or any children who are not yet mature enough to inherit assets. Because a trust can hold assets for many years, it is common for people to direct that their children receive their inherited assets at an age older than 18 or 21. For instance, a trust may instruct that children will receive half of the inherited assets at the age of 25 and the other half at, say 30 or 35. While the children are younger, the trust defines who is responsible to make payments for the children’s expenses and what types of expenses can be paid by the trust. Such flexibility is not available in a will alone and provides peace of mind to parents who do not want their children to blow all of their money at the age of 18.

Who should consider a trust?

A trust should be seriously considered if:

  • You have minor children.
  • You desire for your real estate to be divided among multiple beneficiaries.
  • One or more of your beneficiaries has special needs.
  • You want to protect the identities of your beneficiaries.
  • You do not want your beneficiaries to have to deal with the probate process after your death.
  • You want to ensure someone can easily manage your assets for you if you become unable to manage them yourself.
  • You have a smaller estate.
  • You do not have minor children.
  • You do not have real estate or you have executed a “transfer on death” deed (which transfers ownership immediately upon your death to a beneficiary).

To schedule a free consultation, contact Lisa at (866) 980-0838​.

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