When I was a young teen I watched a lot of tv and movies that showed Beverly Hills rich kids that had “trust funds”. It sounded so glamorous.
Now that I’m a grown-up and have children of my own, it’s time to start planning for the future.
And although I am definitely NOT a millionaire (not even close!)- my husband and I have been talking with my estate attorney about creating a trust- so that our property and assets will be distributed according to our wishes after we die. Having a trust in place will save our family money, time, and paperwork.
A trust is a legal document that holds property or assets for a specific person or group, called the beneficiary. Control of the trust is maintained by a trustee. If the person who established the trust is not living, the trustee may be a family member, friend, or professional.
There are many reasons to set up a trust, such as:
- Avoiding probate
Probate is the process where a judge decides if a will is valid. If your assets are in a trust, your assets can be distributed without a will- and therefore, you can avoid having to go through probate. This can mean a big savings in time, legal fees, and paperwork- as probate fees can be as much as 5% of the your estat
es value and the court process can take up to a year or even two to finalize- during which no one can touch their inheritance.
- Stating exactly how and when your descendants receive their inheritance
A trust is very difficult to contest- more difficult than a will. It also offers flexibility in how assets can be distributed. Some of your beneficiaries may be more effectively able to manage their money than others and you can make provisions accordingly.
- Dividing Assets and Property
Having what’s known as a living trust can help when you have an asset that is harder to split up- for example- real estate. You can detail who inherits a property as well as who has the right to use it and under what conditions; whether the property can be sold, and if so, how the proceeds should be distributed; and how the inheritors of the house can buy each other out if they choose to do so. This way the person who sets up the living trust can ensure that each beneficiary receives equal access to the property. Other assets that could be placed in a trust might be a boat or a car.
- Eliminate Family Feuds
Trusts can minimize conflicts among family when an estate is being settled because the grantor can detail the exact items and monetary amounts to be left to each beneficiary. This is particularly helpful when dividing items that heirs may argue over, or items that may have sentimental value. A grantor can decide to leave, for example an item of furniture to a relative who is a collector and a car to a grandchild who admired it. With all of the specifics spelled out, family members will have less to “argue” about. Trusts can also be customized so that a beneficiaries spouse (ie. Non-blood family member) cannot gain access to the family inheritance.
- Help Managing your Affairs and Privacy
Many people set up trusts in case they become disabled or ill before they die and cannot manage their affairs properly. A revocable living trust can be set up with a named trustee who would manage your affairs. This helps you avoid a situations where courts may have to appoint someone to manage your assets for you.
Also- trusts offer greater privacy than wills because trusts don’t go through probate- so there aren’t public records of who you leave your assets to.
There are many reasons to set up a trust- these five are just a handful. Anyone considering a trust should consult an Estate Attorney that can give them some guidance on what would be a good fit for their situation. (And as an FYI- many Estate Attorney’s offer free consultations… so don’t be afraid to reach out).
P.S. We are holding a FREE seminar on Wednesday, May 1st from 6:30 pm – 7:30 pm at Good Harvest Cafe in Pewaukee, WI entitled “OMG! I’m Dead… Learn what you should do before this moment to prevent chaos from erupting if you don’t come home tonight.”
It will be co-hosted with Ashley Lillesand from Lillesand Law, LLC. She is an amazing Estate Attorney in Brookfield, WI.
Save your (free) seat by clicking here.