We know what you’re thinking. I’m not a multi-millionaire, so why would I need a trust?
Many people think of trusts as an estate planning tool for the über wealthy. And while trusts are helpful for solving privacy concerns and avoiding estate taxes, they serve many other purposes as well.
One of the most common types of trusts is a revocable or “living” trust, so named because it is designed to function while you are still alive. A “living” trust is a powerful estate planning tool that can serve in addition to or instead of a will. Unlike a will, trusts do not require the sometimes lengthy and costly probate process.
Establishing a trust allows you to protect your assets, such as a home or stocks, while still maintaining control of said assets. You can continue to live in the home and buy or sell stocks or other property.
A revocable trust is also flexible. You can add or subtract assets from the trust at any time or change the terms of the trust at any point during your life. The trust can grow with you and your family through whatever changes you experience.
If you’re still young, you may think you can delay starting a trust. But the truth is, death does not discriminate based on age. Starting a trust now, whatever stage of life you may be in, means you’re protected just in case.
Family provides several strong motivators for establishing a trust even if you don’t have a large estate.
Nowadays, many families are blended. If you have children from a previous marriage, you may want to use a trust to protect their interests. Or you may want to divide your assets differently depending on whether your heirs are his, hers or ours.
If you have minor children or a child with a disability, you may want to establish a trust to make sure whoever you appoint as guardian will have the funds to provide for your children immediately in case you die or become incapacitated.
If you only have a will, your guardian may be given an
allowance during the probate process, but it might not be enough to provide for your children.
Another consideration with children is whether they are responsible and mature enough to handle an inheritance. If your children have money management, gambling or substance abuse problems, a trust can be a way to slowly distribute their inheritance so they do not squander it or provide an incentive for them to live responsibly.
Finally, many people these days are living into their 80s and 90s. You may have elderly parents for whom you would like to provide if anything should happen to you. A trust can help here as well.
Once you die, the trust becomes unchangeable (“irrevocable”), ensuring that your wishes are carried out. Assets added to the trust are not subject to probate.
Depending on the situation, the probate process could take several months to several years. Fees for probate include court costs, bond fees, appraisal fees, executor’s fees and attorney’s fees, all of which are higher if the process is longer.
One of the main reasons for a lengthy probate process is family disputes over the will. If you have any reason to believe your family will not agree with how you wish to distribute your assets, then a trust is for you.
Revocable trusts are relatively easy to set up with an estate attorney in Savannah. The cost varies, of course, but putting together all of the legal documentation usually costs less than a few thousand dollars and saves many times that much for the estate.
Michael Smith and Richard Barid are co-founders of Savannah-based Smith Barid LLC, which specializes in elder law, estate planning and special needs planning. They can be reached at 912-352-3999 or msmith@smithbarid.com or richard@smithbarid.com.