When I mention the word "trusts" in the context of estate planning, what images come to mind? Do you see Thurston Howell, III, and his wife Lovey stranded on Gilligan's Island? Or, do you see rich, idles wastrels jet-setting about the world in pursuit of drink, drugs and fleeting pleasure? In reality, the use of trusts for estate planning is not limited to the top "one percent" we hear so much about these days.
This was the subject of a recent article by the Motley Fool titled "5 Things You Didn't Know -- but Should! -- About Trusts."
Here are a few takeaways from the article:
You don't have to be rich to benefit from a trust. Again, the common perception of trusts is that they are for the rich and there are Wall Street advisors managing their money.
Of course, the costs of Wall Street trustees can limit their use to just people of substantial means. But any wise and trustworthy trustee may work just as well for your specific needs.
In fact, you can ask a family member to be your trustee for no compensation and to guard your assets according to the trust's terms. By protecting even a modest sum of money, a trust can make sure that your directions for your money will be followed in the future. Kiplinger's ran an excellent and timeless article several years ago about what everyone should know about selecting a trustee or serving as a trustee. The article is titled In You They Trust.
Trusts can last a super long time. Once upon a time, trusts had limited lifespans. A very complex legal rule, called the "Rule Against Perpetuities," requires that a trust must have all of its interests vest or fail to vest within 21 years of the death of the last surviving person when the trust was created. Consequently, trust subject to this rule generally do not last past one's great-grandchildren.
Kansas follows this rule, but Missouri has statutorially abolished it.
Accordingly, most states set limits on how long trusts may continue on and on, while some have no limits.
Trusts let you keep your business private, even after you die. This has to be one of the best benefits of trusts. As a result, there is no requirement for your beneficiaries or the government to make their terms public—even after you pass away. A will, on the other hand, becomes a public document once it is filed in probate court.
A will’s terms are accessible to anyone who wants to look at them, and not everyone is comfortable with that! A trust allows you to make your express instructions clear, while still keeping outsiders away during one of the most difficult periods for your family.
As you can see, trusts can be very complex. If appropriate for your unique circumstances, however, they can be an excellent tool to achieve your estate planning objectives.
Nevertheless, this is not a do-it-yourself project, so be sure to engage an experienced estate planning attorney to talk about trusts and whether they might fit into your estate planning strategy.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Motley Fool (November 17, 2014) "5 Things You Didn't Know -- but Should! -- About Trusts"