In my last several posts I’ve explained the purpose and definition of a will, who needs one and how to create a valid Minnesota will. I’ve also discussed the reasons why a will alone does not offer you and your family enough protection. I’d now like to take a moment to talk about trusts—a subject that will be of special interest to nontraditional families who may be more concerned than most about privacy, disapproval of family members, or even the threat of someone contesting your wishes in court.
What Is A Trust?
A trust is a far more extensive tool than a will. Most trusts created for estate planning purposes are revocable living trusts (or RLTs). An RLT is a document created not simply to distribute your property, but to own your property on your behalf, to be invested and spent for your benefit or the benefit of your named beneficiaries. As such, a trust takes effect as soon as you sign it and your property is protected by and subjected to the trust parameters as soon as you place them in the name of your trust.
What are the Benefits of a Trust?
There is a lot of flexibility available with a trust, and yours can be created to fit your unique situation.
Because the trust is the official owner of the property within it your assets and your wishes concerning your assets remain private. There is no need to inform your next of kin as is necessary with property going through probate via your will.
Another benefit to bypassing probate is that trusts cut down on post-death legal and probate expenses.
Because most RLTs name the trust creators as the initial trustees you retain complete control over your assets, nominating trusted individuals or banks to take over as trustee when you (the creator) become incapacitated or pass away.
Trusts are enduring. Property in a trust is not merely distributed and that’s the end of it; the creator can instruct the trustee to distribute the money slowly and in any number of ways, even to the extent of creating new trusts for each beneficiary. This is especially important if you have young children who are not yet responsible enough to manage their own money. Trusts can last for generations, as evidenced by the enduring Kennedy trusts.
Wills and trusts are necessary tools in estate planning, each one working in unique situations. I often recommend using both documents in tandem, especially for nontraditional families who can’t count on their assets transferring automatically to partners and loved ones. We have to take extra steps to ensure our unique families are protected and provided for.
If you have any questions, or would like more information about wills or trusts, contact me today.