We have arrived at that time of the year when individuals and businesses begin looking forward and start planning for the new year. One of the tasks people often engage in during the end of the year is estate planning when they try to draft or revise wills, medical directives or healthcare power of attorney, guardianship, conservatorship power of attorney and trusts.
While each document functions differently, the most important factor is to prepare your estate documents sooner rather than later. It’s usually not a good idea to have the state dictate how your assets will be shared among your loved ones after you have expired. I can tell you, that leads to lots of confusion and needless legal fees.
Speaking of legal opinions, however, one of the most common inquiries revolves around the need to create a trust. While Today’s Money Monday will not answer many of your questions, it does attempt to address the most fundamental question: do you need a trust?
It is very common to hear people say they need a Trust, but when asked why, they really cannot provide a solid answer beyond the fact that they heard about it on the radio, saw something about it on television or it’s popular.
Trust Reasons
You should first recognize that a Trust document works in tandem with other estate planning related documents and should therefore be part of your comprehensive estate plan.
- Given such a background, one reason you may need a trust is because you have real estate or property in multiple jurisdictions. Owning property in multiple jurisdictions could mean that your properties are subject to different probate laws and rules. The probate process can be expensive and therefore you could avoid some of this expense by having a Trust, since Trust are not subject to the probate process.
- Another reason you may need a trust, is because you want to, as I would describe it; “control from the grave.” Long after you have expired you may want your assets to remain with your family and for them to enjoy its benefits. Establishing a trust is one way to ensure that your legacy continues and not have assets sold for cash and disposed of otherwise.
- Let’s say that you have a family member who is receiving public benefits or you may consider an aging family member who will one day receive public benefits; then a trust should be explored to determine how public benefits may be impacted by any direct inheritance.
- Another reason to consider a Trust would be because your assets exceed or are near the federal or state estate tax exemption limitation. This would result in your estate incurring taxes, when you could have planned around it. Why give the federal government or state additional taxes and leave your family with less to inherit?
- The last reason I’ll share that you may desire a Trust is because of privacy. Simply put, trust assets are not held in your name and therefore are not publicly recorded. Additionally, distributions made to beneficiaries are not publicly recorded and are executed privately.
The real reason you need a trust can be answered by asking yourself the question, what are your goals and planning needs? Clarifying that question will help put you on the decision path to assess whether or not you actually need a Trust.
What’s Up
Today’s What’s Up is about credit score news. If you are in the market to purchase a home the good news is that while Fannie Mae and Freddie Mac in the past only used FICO scores to evaluate loan applicants; lenders are now using Vantage score a competing, a competing score to evaluate loans which could increase the pool of those who qualify to purchase a home. And that’s what’s up!
Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2025. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.
