What Does A Trust Accomplish?
Probate avoidance. When an estate is conveyed through a will, the probate court must validate the will before its provisions can be executed. Please note that the designation of the personal representative/executor and the terms of the will are very much like pitches in a baseball game. Like the old umpire told the rookie, “They ain’t nuttin’ until I calls ’em.” The court has to verify and validate the propriety of the will, and the terms, before it goes into effect. A trust can usually avoid this process — but an unhappy beneficiary or heir can still drag the trust and the trustee into court.
Whether by trust or probate, there can be problems in distributing your property pursuant to your wishes. For myself, I’d rather have good people and bad paper than the other way around. Assets held in a living trust are not subject to probate court jurisdiction unless someone insists on taking the process into court.
- Expedited distribution. A trust allows assets to be distributed to your heirs as quickly as your trust agreement instructs, and the taxing authorities allow, without the additional delays of probate. Your spouse or heirs could receive income to provide for living expenses immediately. Note, though, that a special administration in probate can be set up virtually overnight, if need be.
- Privacy and confidentiality. When a will is entered into probate all of its provisions become a matter of public record. Trusts are private arrangements; its terms are not made public at your death. Your assets and intentions are known only to your trustee and beneficiaries — as long as everyone stays happy with the process.
- Expense reduction??? Many sources will tell you that a trust will reduce your expenses by avoiding probate. This is not necessarily so. Trusts usually cost significantly more than a will to create and manage during your own lifetime. Thus, while your heirs or devisees may well save money by avoiding probate, you may end up paying as much or more in creating the trust in the first place. The best solution is to consult an attorney for advice based on your personal situation.
My best example of someone who should have a living trust is the person who owns apartment buildings, or something along the lines of a hardware or sporting goods store. If the rent isn’t collected by the 10th of the month, a lot of tenants are going to find other, more urgent, needs for their money. The inventory of a family-owned hardware store is usually the entire family fortune. It can disappear out the back door in less than half a day — or night. With a trust, In the event of the owner’s disability or death, the successor trustee can step in quickly and take over without having to go to court to get legal authority.
Another good example is when someone has a spouse who is disabled or incompetent — the successor trustee can step in quickly to care for the surviving spouse. Note, however, that you have to have someone you can really trust to take on such far-reaching powers. Like I tell people when they sign a power of attorney, “You have to have someone you can trust to not use your money to pay their bills. You are giving someone the ability — the right, but the ability — to send you a postcard from Cozumel telling you, “Having a wonderful time with your money. The ferry to Cuba leaves in 10 minutes. Thanks again.”
Discuss The Benefits Of A Trust Without Breaking The Bank
There is no good reason you should have to pay exorbitant fees just to learn your options, protect your estate and plan for the what-ifs. At David K. Porter, I keep my fees reasonable so that working families, single individuals, new parents, parents with special needs children and anyone else who requires an estate plan can afford them. I invite you to my Minneapolis office to learn more about trusts, wills and other estate planning documents at a free consult. Call 612-722-1001 or request more information by using my contact form.