Don’t Fear Trusts

A trust can be an essential estate planning tool that should be considered in certain cases. Unfortunately, many times when I am discussing estate planning with clients, I am met with fear and hostile resistance if I attempt to discuss the need for a trust. In my opinion, much of this fear arises out of the 1990’s when many people were sold trust packages and, in many cases, they were not candidates for the use of trusts.

In the mid-1990’s, many groups and authors of articles touted trusts as the next best thing to sliced bread. People were told that trusts would save them money on estate and inheritance taxes; trusts would allow them to avoid probate; trusts would keep their testamentary intentions secret from the rest of the world, etc. In many cases these statements were exaggerations, at best, and outright lies, at worst. Many people spent exorbitant amounts of money to have trusts prepared when, in most cases, a Will, Power of attorney and Living Will were all that was needed. In one extreme case, a client showed me leather-bound, gold inlaid “trust” binder that cost them $5,000.00 and their assets were never transferred into trust. They paid $5,000.00 for a document that they did not need and did not help them in any way.

Accordingly, many times when I mention the possibility of establishing a trust, the client will tell me a story of how they or some friend or relative paid a lot of money for a trust that did nothing for them. Naturally, they are not interested in discussing a trust now.

However, in some cases, trusts do have a useful purpose and should be considered. For example, a parent may want to establish a trust for a disabled child who, for various reasons, cannot have money left to them outright. A person with substantial assets may want to use a trust to make sure that their assets are used for the benefit of the client and their spouse and family. While a power of attorney may also accomplish this, a trust may better protect the assets.

Is a trust right for you? It depends on many different factors, including your age, your assets, your intentions as to your assets, your family, etc. A good estate planning attorney will review these factors with the client and then advise the client as to whether they should consider the need for a trust. In some cases, I will recommend that the client also consult with a financial advisor or tax accountant as to the need for a trust. Ultimately, the final decision rests with the client. But at least the client can make that decision after receiving proper advice from their estate planning professionals.

So, when preparing an estate plan, be prepared to discuss the need for a trust with your estate planning professionals and please keep an open mind as to whether you should consider having a trust prepared

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