The future may be largely unknown, but that doesn’t mean that you can’t work to prepare for it anyway. In fact, preparing for your family’s future is something that is much more than an opportunity; it’s a responsibility. You owe it to them to ensure that your loved ones are properly cared for when you pass away, especially when you have a spouse or other dependents who rely upon you for their wellbeing. These days, estate planning has become more important than ever before, as individuals try to ensure that their assets are protected against loss, managed efficiently, and properly distributed to heirs when they die. To accomplish those goals, many people rely on living trusts. A trust can offer many advantages, including asset protection, efficient distribution of inheritances after death, and more. There are many individuals, however, who incorrectly assume that trusts are only useful for the rich, or that they are too complex for use by the average American family. Nothing could be further from the truth! Trusts are flexible legal tools that can benefit almost anyone with assets. And while they should be created with professional assistance, the fact is that they are nowhere near as complex as most people might think – as these essential estate planning facts will demonstrate. Just know this: setting up a trust may be one of the best things you can do to protect your loved ones and secure their future.
The Easy First Steps: Decision-Making
When setting up a trust, you have to begin with the basics. The first thing to decide is whether you want an individual trust for yourself or – if you’re married – a shared trust for you and your spouse. Of course, you should also consider which of your assets you want to place into the trust. Most people focus on the high-value assets that would end up being subject to probate, but the decision can be different for each person. Just try to have a somewhat firm idea about the types of assets you’ll use to fund your trust.
You also need to think long and hard about who you want to name as beneficiaries of the trust. While some choices – like your children and other family members – are usually fairly obvious, others may require more thought. For example, there may be certain charitable organizations that you currently support, and you may want your estate to continue to provide that help when you’re gone.
The Trustee Question
How you settle the trustee question will largely depend upon the type of trust you select. If you decide to use an irrevocable trust – for Medicaid planning or some other asset protection purpose, for example – you’ll need to select a trusted friend, family member, or professional to oversee the trust’s operations. That person will be your trustee, and will operate the trust in accordance with the terms you define in the trust agreement.
If you choose a revocable living trust, though, you will more likely than not name yourself as trustee and maintain control over the trust assets throughout the rest of your life. In that case, you will need to name a successor trustee who will take on that role when you either die or become incapacitated due to illness, injury, or other causes. You can choose a family member, friend, or even an attorney – but it is wise to ensure that the person you select assents to the appointment.
Consider the Children
Before you take steps to create and finalize the terms of the trust, consider any dependents you may have. If you have minor children or children with special needs, you should carefully consider how you distribute their inheritances. In most instances, you should name a guardian or someone to take custody of any minor children’s property distribution. If your heir has special needs, you need to consider whether any inheritance might disrupt important government benefits that he or she might be receiving. If so, you should talk to your attorney about establishing a special needs trust.
You Need an Attorney
If you haven’t already done so, now would be a good time to consult with an attorney. With those previous considerations under your belt, you’ll need to actually prepare the trust agreement document. This is the part of the process where you should ignore all those websites and so-called experts that tell you that you can do this on your own. Remember, no form document is likely to provide the type of flexibility you need for your customized trust agreement. Get a lawyer and ensure that your trust document is created the right way so that you can avoid costly mistakes later.
Sign and Notarize Everything
Like a will, everything needs to be done according to the proper specifications if your trust is to withstand scrutiny later. Make sure that you sign the document in front of a notary public so that the agreement is executed properly.
Don’t Forget to Fund It!
One other setup fact that you should never forget is that all of this is for naught if you neglect to fully fund the trust. In fact, many trusts end up failing to accomplish their objectives due to a failure on the part of the grantor to complete this one crucial step. To fund the trust, you need to transfer ownership of your assets to the trust. Many people find that the advice and assistance of a competent trusts attorney is essential for the funding part of the trust setup process.
We Can Help!
At Biddinger, Bitzer & Estelle, PLLC, our experienced trusts attorneys can help you to make setting up a trust easier than you’ve ever dreamed possible. We’ll walk you through the process and work with you to ensure that your trust goals are clearly outlined and met by the terms and structure of your trust document. To learn more about how we can help you with all your estate planning needs, contact us at our website now or call us at (989) 872-5601.