It’s clear that everyone needs to have a will, but the increasing use of trusts in estate planning have many people wondering how trusts fit into an estate plan.
If you learn anything about a celebrity’s wealth after they die, chances are it’s because they had a will and their estate went through probate and the will became a public document. One of the benefits of creating a trust, is that personal information about assets remains private. Estates that incorporate trusts are often settled more quickly than those without.
The New York Times recently published an article, “Life After Your Death? Here’s Why You Should Have a Trust” that explains that trusts have often been thought of a way for wealthy people to dispose of their assets.
However, some trusts can be useful for those who are not ultra wealthy. One of those is a revocable trust, which can be changed during a person’s lifetime. A properly funded revocable trust can avoid the need for probate after death.
If assets that have been titled in one name, are retitled in the name of the trust, the payment of any bills will continue without interruption in the individual’s lifetime. This can work in any situation, where financial support is given to family members.
Unlike an irrevocable trust, where assets are dispersed with more permanency, a revocable trust can be changed during the holder’s lifetime, if she decides to handle her assets differently.
If that person’s financial situation changes or if she believes that she’s made a mistake, she can close the trust and void the arrangement.
The trust is similar to a will but is more private. It isn’t subject to outside review or approval. A will may need court approval, and every state has its own probate laws.
Think carefully before deciding who you would like to serve as a trustee. They’ll need to be a person who has knowledge about finances and is responsible enough to be trusted with the task. Remember that revocable trusts are really used for planning while you are alive, so it also needs to be someone you know you work well with.
Reference: The New York Times (March 22, 2018) “Life After Your Death? Here’s Why You Should Have a Trust”