A Trust is Practically Magic: 5 amazing things you didn’t know it can do

A Trust is practically magic; it can: avoid probate; protect you during incapacity; protect assets for beneficiaries; care for minor family members; leave family legacy.

First, a Trust does not require probate.

A Trust is a private, estate planning contract. As a result, you and your Trustee will be able to administer assets without court supervision.

In addition, your Trust can provide for you and your care if you should lose the ability to care for yourself.

In the event you become less able to care for yourself, your Trustee and trust assets can be there to care for you. Your Trust can provide for you for the rest of your life.

Also, Trust distributions can be protected from creditors of your beneficiaries.

With a spendthrift provision, distributions to your beneficiaries can be protected. Your family, with that provision, cannot be garnished or lose trust assets to forcible seizure by creditors.

Again, you can set up a portion of your Trust to care for minor children.

So, your Trust can provide for them under conditions until they reach an age where they can handle assets themselves. Within your Trust, I often write a children’s trust for the benefit of anyone who may not be yet of the age of majority, or sometimes a little older. So, that is up to you.

Finally, your Trust can provide for a family legacy by providing for education.

This means, your Trust can make a down-payment on a first home, marriage gifts, and about anything you can imagine. You can plan and have your Trust make distributions long after you are gone. As you know, this is unlike a Will, which makes lump sum distributions right after completion of the probate process. As I said, a Trust is practically magic.

I hope this helps you.

Your Trust: consider some pivotal questions

Your Trust: consider some pivotal questions beyond simply to whom you ultimately leave your assets.

Ok, we begin with a somewhat common situation for folks who need a trust. A couple want their assets to be in trust but fully available while they are both alive. Then the survivor of the two of them should have access to some or all remaining assets for their life. And finally, their family should divide those assets remaining after the passing of the second of them.

Should the survivor have access to all assets after one of them has died?

After one of you passes away, would you like the surviving spouse to have access to spend all assets of the trust? Should they have access to both principal and income of the trust? You could agree that they may access just income. You could, perhaps, agree that they can get to income and principal ,but with a maximum distribution per year.

Moreover, would the two of you like the survivor of you to still retain the ability to amend or revoke the trust? This and the question of how much of the trust the survivor of you may spend both relate to an underlying consideration. Are the two of you agreeing to preserve something to ultimately pass to family or are you more concerned that the survivor of you will need access to trust assets? And a little spoiler alert is in order: how you approach this question may change over the years. (But again, at least while both of you are alive, you may amend your trust.

How and when should remaining assets go to family?

Think about how important it is for you that you divide assets equally (for instance, among your children). And, if you would rather your trustee not distribute lump sums to your beneficiaries, would you like assets to be distributed over time? For instance, you can distribute according to the age of each beneficiary? If your beneficiaries could be younger, would you like to provide for support of children while they are minors? Are you interested in setting aside a sum for post-secondary educational needs of children or grandchildren? There are many, many possibilities to allow that you leave the legacy you intend.

After the two of you have passed away, who should be Trustee(s)?

It is no surprise that the trust will not administer itself. After the death of the second of you (and maybe even during the life of the survivor of you), it is important to have named a successor trustee. This trustee is the person who will administer your trust, according to its provisions, after you are no longer acting as trustee.

So, these are just some more-detailed things to consider when starting your estate plan. Think first about whether you want to get things in order, and what you want your legacy to be.

This is, after all, YOUR Trust: consider some pivotal questions.

Will or Living Trust: which is better?

Will or Living Trust: which is better? A Will usually requires probate, but can gather assets upon death. A Trust does not require probate, but you should convey assets into Trust during life.

We will consider some basic ways a Will and Trust differ:

Will:

When I die, ___ goes to my ___.

So, assets I owned in my sole, individual name are subject to being probated, per terms of my Will.

I name my spouse as Executor, and maybe my oldest child as backup, to administer my estate.

Then, my Executor hires attorney for Probate (court-supervised administration; likely takes several months – sometimes 4 months just for creditor waiting period).

  • Court accepts Will for probate.
  • Court formally appoints Executor.
  • Executor files inventory.
  • Then, the Executor gives notice by publication and directly to heirs and creditors.
  • Waiting period to give opportunity for creditors to file claims against estate.
  • Court supervises more or less, depending upon type of probate.
  • Executor accounts for and distributes assets with Court approval.
  • Finally, the Estate is closed.

Trust:

  • When I die, my spouse has continuing control and use of all assets.
  • After spouse dies, then assets applied for care of kid(s) so long as minor(s).
  • Assets are available for post-secondary education for kids(s).
  • And, remaining assets go to kid(s) at age 22, 25 and 30.

Now, when I sign a living trust, I’ll title major assets into my Trust (a Trust does not gather assets into it automatically but you may have a backup “Pourover” Will to move forgotten assets into your Trust).

Trust administration usually means:

  • Minimal notice goes to beneficiaries and accounting (per state statute).
  • Trustee manages and distributes assets of trust.
  • Court need not supervise.
  • Proceedings are not filed or public.
  • Trust provisions control how Trustee may act.
  • Trustee owes duty to beneficiaries.

So, please note that this is, of course, general advice. You should get attorney advice for your specific situation.

Four Critical Documents for your Estate Plan

The four critical documents for your Estate Plan include:

  1. Trust
    • 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
  2. Durable Power of Attorney
  3. Pourover Will
    • A backup Will that only leaves things to your genuine estate plan: your Trust
    • A just-in-case measure in the event you acquire a major asset that needs to be probated (after your death) into your Trust
  4. Living Will
    • While not a mandate or enforceable contract,
    • It tells others, including your medical attorney-in-fact (named in your DPOA) that you do not wish to be maintained by life support machines if you do not really have a prognosis of recovery to your quality of life

These are Four Critical Documents for your Estate Plan. This does not cover all the bases, but these are the basics.

Take care of Your estate plan. Talk to your parents about Their estate plan.

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Avoid probate: why is a Trust better than a Will

Avoid probate: why is a Trust better than a Will

Trusts Can Reduce costs after death

Probate involves court costs, publications, attorney fees and sometimes executor compensation. Many folks decide to avoid these costs by signing a living Trust.

Faster? Avoid Probate

A Trustee can distribute Trust assets fairly quickly. The Executor in probate, however, has to follow a number of notice procedures, publication, waiting periods, and due process considerations to present opportunities to object, before the court approves passing assets of the decedent.

Incapacity during life: Trusts can help more than a power of attorney

A Trust can do more for you during incapacity than merely having a durable power of attorney. While the power of attorney document might grant authority, your trust is more likely to outline more thoroughly the parameters within which you want to live AND far more likely to provide assets to make those wishes your reality.

Contests are Not Encouraged by Trusts

Probate, by its due process oriented nature, provides built in invitations to challenge the Will, object to who may control the estate (appointment of the Executor) and the size and type of ultimate distributions from the estate. Trusts, on the other hand, do not carry the same burdens of administration. While there is built-in accountability, distributions can be made which are plainly within the terms of the trust document.

Real Estate in Other States; Double Probate?

With a Will, you are very likely to need, in this situation, to conduct probate through courts in each state. A Trust can allow your Trustee to convey real estate in each state in which your Trusts holds property. Yes, your Trustee can do so without hassle.

Swift business succession; Maybe Not with Probate

Your business may need to re-tool, change management, re-align how or what it is marketing, or just liquidate quickly. So, having the ability from your Trust to be nimble and agile is certainly helpful to preserve its health. In probate, on the other hand, you can be stuck waiting for court permission to make any number of changes or liquidation. This is just a no-brainer.

Trusts can be Easier for your family … Avoiding Probate is already handled.

Many people are simply of the mind that they like to know the bulk of their estate planning and succession is handled. They put in a little work now, and it is simply easier on their family, who has fewer hassles when they are gone.

Avoid probate: why is a Trust better than a Will. It does not seem to be a close call. There are so many concrete reasons.

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