Can A Trust Benefit Your Family?

December 15, 2010

Filed under: Estate Planning — Tags: , , — Alexis @ 9:04 AM

Most Americans don’t realize that they have an estate.  Most people think that an “estate” includes a mansion in the hills, a private jet, or millions of dollars in investment accounts.  But the true definition of “estate” is a person’s possessions or property—regardless of the size or amount.  Everybody has an estate; and if you own a home, have a retirement account, or have any personal property of value you should consider creating a trust for your “estate.”

Before you scoff that you aren’t wealthy enough to need a trust, consider that there are many different kinds of trusts, each of which may be used for specific situations.  Some trusts are complicated and extensive, created by wealthy families to preserve assets through generations.  Other trusts are simple and to the point, created by young parents to ensure that their minor children will be provided for.  What kind you will need will depend on a number of factors, including the size of your estate, your goals for that estate, the age of your children, your marital status, whether you have a special needs child or grandchild, and many, many more.

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 during your lifetime, 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 it, as soon as you place your assets in the name of your trust.  There is a lot of flexibility available with a revocable living trust, and yours can be created to fit your unique situation.  Most RLTs name the trust creator (you) as the initial trustee, nominating individuals or banks to take over as trustee when you become incapacitated or pass away.

One of the primary benefits of a trust is that when you pass away, property is not merely distributed and that’s the end of it; you can instruct the trustee to distribute the money slowly and in any number of ways, for example, keeping it out of the hands of a spendthrift child or protecting it for the benefit of a special needs child.

You may not have a Back Bay penthouse or an Italian villa, but you do have a family to protect.  We’d like to help.  Contact our office to find out if your family needs a trust.