What Does A Trust Do & Why They Are Seriously AWESOME

Do you think Trusts are just for the wealthy? You’re wrong. Keep reading to learn what does a Trust do and how it can help you, your family, and loved ones

If you own a home, assets worth more than $100,000, or have specific ways you want your estate distributed after you are gone, then you should consider a Trust. When making the major change of downsizing, your support team likely needs an estate planning attorney to help create your Trust. Even if you already have a Trust, it must be updated as your family, finances, and health change.If you don’t have one already, the main reason, you need a Trust is that you do NOT want your family to have to deal with all of the assets in your estate going through Probate Court.

What is Probate Court?

It’s the court that determines who is in charge and how your assets are used or divided if you’re incapacitated, or after you die. Meaning, your family could still end up in Probate Court, even while you are still living. Estates without proper wills and Trusts in place must go to Probate Court and often take months (sometimes years) to go through the entire process. If you have a significant estate, you may see 30-40% of the assets eaten up by the state and the federal government. And, even if you don’t have a significant estate, when you don’t have a Trust set up, your family is in for months of attorney’ fees and time in court. Likely, a large portion of your things (including vehicles or other real property) will end up being eaten up in the system.

You Do Have Some Options Here, and It’s Not Expensive to Set a Trust Up

Step One: Talk to an estate planning attorney or financial advisorIf you don’t have one, your bank probably has someone you can talk to for free. Set up an appointment and do this. You will save your family weeks (maybe months) of work straightening out your affairs after you are gone. These key team members can guide you based on your level of assets and your age, so you can get the most from your money as you age and even after you die. Step Two: Decide what kind of Trust or estate plan works for youWe all hear about the lady who gave her dogs her billion-dollar estate. You can do that, too, if it’s what makes you happy. But you have to get it documented properly. The folks around you need to know your wishes so they can make it happen. Think about it like this: Your family is grieving and really sad that you’re gone. It’s a lot easier following your last wishes (even if they don’t agree) than it is trying to guess what you might have wanted, and arguing about who gets the blue chair and the good china.

What Does a Trust Do?

It sets up a legal way for you to divide your things, but it can also provide:

• Beneficiary protection

• Long Term Care guidelines

• Incapacity guidelines

Your Trust can also set up care for minors if they are the recipients of your inheritance. It can manage creditor protection, bad marriage protection, substance abuse protection, and special needs protection, as well as protection from being a “spend-a-holic.” There’s loads of info available on it, and since we aren’t in any position to give anylegal advice, we strongly suggest you find an estate planning attorney who can help you in this area. They have been to law school and are required by law to know the latest legalities of what is happening federally and locally.In addition to a Trust that helps you plan for incapacity, make sure your plan includes medical directives, so your loved ones can carry out your medical wishes. Make sure it also covers a Health Insurance Portability and Accountability (HIPAA) authorization to allow your loved ones to talk to your caregivers and other medical professionals.

What Does a Trustee/Trust Officer Do?

Step one and two are done: your Trust is established. Now, who administers your wishes when the time comes? What’s the difference between a Trustee and a Trust Officer? In truth, there isn’t a lot of difference.A Trustee is someone who is named in the Trust to make sure the Trust is followed. It can be a family member, an attorney, or a financial advisor.A Trust Officer is usually someone who is chosen by the person who set up the Trust to make sure the wishes are followed. And they are paid. They are responsible for managing the Trust Administration. The Trust Administration includes both the fiduciary responsibilities and the distribution of assets. This can be a financial or wealth manager, an attorney, or a Bank Trust Administrator. Often a Trust Officer is used if there are no living family members left, or if there is a dispute between family members and the assets need to be divided, so there aren’t emotions involved. Sometimes the person who sets up the Trust just wants a neutral party to be involved. A Trust Officer is governed by a set of laws and ethics that they have to make sure are followed.

Conclusion/Tips

I don’t want to imply that all families argue. Still, if there is something to dispute, and it has monetary or sentimental value, sometimes it makes it way, way, way easier to put it in writing, so there’s no confusion as to what you wanted to have done with your stuff. Trusts are a great way to make that happen. You can get an excellent solid Trust that includes medical power of attorney and all sorts of other things for a reasonable amount of money, depending on the attorney you hire to draft it. Not all attorneys are created equal—work with someone who specializes in estate planning. Also, Trusts don’t last forever. Reviewing and updating them is a normal part of having one. Most people review their plan every few years. It should also be altered or amended if your assets change, or someone named in the Trust dies or needs to be included or excluded. Find a great estate attorney; they can help you with this part. And then you will know you’re covered when you need to be, and your family is protected from squabbles.

Now, the only question left is: How prepared are you? If you need help with your downsizing process, contact us.

Downsizing the Silver Tsunami - The Betty Brigade - Sharon McRill

Article based on my most recent book, "Downsizing the Silver Tsunami." This book is a practical resource for anyone who is facing the task of downsizing—moving from a larger family home to a smaller house, condo, or multi-family living situation. Learn more.