A Trust is not a mystery; here is an example.

A Trust is not a mystery; here is an example. Let’s talk about what might be included in a somewhat routine trust. You should understand how it works.

A Trust is not a mystery; here is an example. When you sign your Trust, we will also put property into your Trust. The Trust can manage only what it owns, and funding the Trust keeps your family from having to go through probate upon your death.

During life.

During your life, you use the property held in your Trust just as you would if there were no trust. Upon any incapacity, your Trust is there (and through administration by your named Trustee) to care for you.

At your death.

Upon your death, your Trust remains there for your spouse during their life and any incapacity. Also, upon your death, your Trustee may distribute things per your Trust’s Personal Property Statement. So, your Trustee might deliver your hobby items to your child, your collectibles to your nephew, and divide your quilts among your children.

Upon the death of your spouse, your Trustee may distribute (per the terms drafted into your Trust):

  • funds in support of minor children or grandchildren until they reach the age of majority;
  • funds set aside for post-high school education or training of certain people;
  • real estate, divided among your children;
  • any charitable contribution you may have directed;
  • remainder of assets to people you name (to receive right away or upon reaching certain ages, if you like).

Once the Trust has distributed all property, its function is at an end, so it terminates.

A Trust is not a mystery; here is an example.

I hope you have a better understanding now. If not, let me know! I am Dan Covington. You can always find me at EstatePlanKansas.com or on Facebook at “Estate Plan Kansas.” Let me know what I can do for you: http://estateplankansas.com/contact/

Two fundamental pieces of an Estate Plan

Two fundamental pieces of an Estate Plan. A Trust or Will conveys assets upon death. A Power of Attorney names someone to help with your finance and health.

Durable Power of Attorney

Trust or Will:

Trust

  • Convey assets into Trust during your life
  • Provides mechanism and assets for you during life and during incapacity
  • Provides assets during life of surviving spouse
  • Distributes after life of both of you to your ultimate beneficiaries
  • Does all of this without need of probate

Will

  • state your wishes, such as, “I leave everything to my spouse; if my spouse should not survive me, then divided equally among my children”
  • Executor must probate your Will for it to be effective
  • probate is often a 6-month process, or longer, involving the court, attorneys, notice, publication, deadlines and various levels of court supervision

Again, there are two fundamental pieces of an Estate Plan. One is to convey your assets, and the other puts someone in place in case you need help handing your affairs.

How does my Trust avoid probate?

How does my Trust avoid probate? Why is it that a Will needs to be probated through months of administration in the court system, but my family can handle my Trust without that procedure?

A Trust is a Contract.

First and foremost, a trust is a contract. Kansas law has determined that trusts are enforceable agreements. Because they are enforceable agreements, trusts are valid methods to transfer assets presently and upon or after one’s death.

How does a Will work?

Your Will might say that you want everything to go to your spouse. It may continue to say that if your spouse does not survive you, then divide your assets among your children. Granted, it will contain more language than that. But, that is the essence. When you die, your Will is offered to the court for probate. Then it can act on (control) any property that you owned, so long as it did not already pass to someone else. For instance, you may have a bank account or a vehicle that you jointly own. The full phrase is really “joint title with right of survivorship”. This means that upon proof of death of one owner, the property becomes owned by the survivor.

Now, once your Will is offered and accepted for probate, it can direct the distribution of those assets you owned individually. Now your Executor must follow a procedure of administration. Once notice is given to creditors, heirs, devisees and legatees, your estate can pay expenses of administration and claims. Then, your Executor will seek approval to distribute assets as directed in your Will. This is often a 6-month or more process.

So, how is a Trust different?

Again, a Trust is a contract. It is a contract that you enter into with your Trustee. You convey property into your Trust during your life. And, you draft provisions into your Trust so that upon your death, your Trustee has legal authority over that property. Since your Trust already owns your property, the property does not need to be probated at your death, to move it out of your hands.

Your Trust will likely direct that your Trustee pay some taxes and final expenses. Then it may direct that they manage and/or distribute your property according to your directions in the Trust. There are some notice and transparency requirements, but essentially, your Trustee has the authority to distribute your assets per your wishes. It is important to note, your Trustee is obligated to act only as directed in the Trust document, without discretion to vary from the agreement (the Trust).

What really happens, upon death, with a Trust?

Basically, the Trustee needs to take care of a few things, and without involving the court system. The Trustee gives notice to beneficiaries, and takes care of final expenses and taxes. Then the Trustee can, without any court requests or approval, distribute the assets. Again, this is all as directed in the Trust document. The Trustee might, depending upon the language of the trust document, manage assets for a time. The management may last until the Trustee distributes assets to certain people only for certain reasons (like education) or at certain times (like the person reaching their 21st or maybe 30th birthday). Once the Trustee has completed distributions, they terminate the Trust.

Wrap-up.

How does my Trust avoid probate? So, a Trust is different because it does not require that a court set aside the assets for administration and distribution. Trust assets are already set aside, prepared for management and distribution.

So what do I have to do to get my estate plan done?

So what do I have to do to get my estate plan done? Give me a call, then respond to follow-up email from me, review your plan, and sign. It’s that simple.

Stop telling yourself that your estate plan is too much to deal with right now. I will do the “dealing” … you mostly just answer some questions and sign. Relax, I have done this before, many, many times. I will do what I can to make it simple and straightforward.

Call.

If you will click on the “Contact” link provided, you can set an appointment for us to talk by phone in the next week or so. The call should only take around 15 minutes: we’ll talk about basics of your plan, what are the documents, and I will answer your questions.

Follow-up.

After our call, I can email you some of the detail questions I mentioned in our call. Then, you can reply, while I draft your plan. These are questions like, “who should get your house” and “would you like to set aside a college fund?”

Review.

Once I draft your plan, I can send you documents or selected portions for review. You look through this, we can discuss your questions and edits. I can then be sure this is just what you want.

Sign.

We meet to sign. I provide witnesses and a notary. You execute the documents.

Take Action.

Your estate plan is vital to your future and for your loved ones. I know that doing this is something new for you, so I work hard to make it easy. If you will book a call, you are taking step one. Then, I’ll be there for the rest, we’ll talk through it, and you may be surprised at how simple it is. You will be glad to have this completed!

What’s the result? Why is it SO NICE to have your estate plan done?

What’s the result? Why is it so nice to have your estate plan done? Your plan is there for you, avoids probate, and provides a legacy.

Your Plan will be ready to take care of you and your family DURING your life. In case you would lose capacity or become disabled:

  • your plan names someone to care for you
  • you nominate someone to care for your kids
  • assets are accessible to support you (and your kids)

Also, avoid probate for your family:

  • save time
  • reduce expenses and attorney fees
  • avoid needing court involvement and supervision in distributing your estate

Importantly, provide your assets as a legacy, rather than something to be dealt with:

  • support your family after your passing
  • provide support for children until an age you select, when you think they will be ready for a lump sum
  • set aside funds to be used for post-secondary education or training
  • leave a legacy for those with whom you share your life

So, how do you get it done? Mostly you:

  • see an estate planning attorney
  • talk about what you want and answer some questions
  • sign the documents

What’s the result? Why is it so nice to have your estate plan done? You have seen the many great reasons, for you, and for your family. It is really very simple to get this done. And, your part is easy.