Log in Subscribe
Making Sense Out of Dollars

Trust Me

Joel Lerner, Columnist
Posted 7/2/21

Part 10 of 11

WHAT ARE MY FINAL THOUGHTS ON TRUSTS?

Even in the most open families, conversation often quiets when two subjects arise: death and money.

For both parents and adult children, …

This item is available in full to subscribers.

Please log in to continue

Log in
Making Sense Out of Dollars

Trust Me

Posted

Part 10 of 11

WHAT ARE MY FINAL THOUGHTS ON TRUSTS?

Even in the most open families, conversation often quiets when two subjects arise: death and money.

For both parents and adult children, confronting the prospect of each other’s deaths can be uncomfortable. Privacy around financial matters is often a key concern, even among close family members.

When it comes to estate planning, there are often significant financial and personal benefits to being transparent and having sensitive conversations. For example, you might assume one of your likely survivors would be comfortable managing a certain asset or serving as trustee, when in reality that person is not up to the responsibility.

From the survivors’ perspective, it is important they understand your intentions and plans for your estate. Lack of clear communication during estate planning (or an inadequate or outdated plan) cannot only reduce the amount your beneficiaries receive; it can also result in uncertainty and conflict for them in an already difficult time.

If you do most of the work on your family’s finances, you’ll want to be certain of your survivors’ comfort level with taking on the task and their understanding of your intentions. For some, it may be best for a professional to assume the responsibility. Consult with your attorney or advisor.

Survivors may even make decisions based on erroneous ideas of what the deceased would have wanted. For example, when communication is lacking, some surviving spouses think honoring their loved one means keeping investments exactly as they were at the time of death. Eventually, this could lead to an outdated portfolio and missed growth opportunities.

The past articles on trusts can be summarized as follows:

1. The most common reason for making a trust is to keep property from going through probate.

2. A Living Trust is created to be effective during the lifetime of the one who creates the trust.

3.  Although you no longer own the assets, because the Living Trust does, you still have access to the assets during your lifetime.

4. In every trust document, there are three principals: The trustor, the trustee and the beneficiary.

5. The assets funded in a Living Trust will still be considered your own personal assets for creditor and estate tax purposes.

6. A Living Trust can be changed or terminated at any time before the trustor dies. This is not the case in an Irrevocable Trust.

7. It will almost always cost more to establish a trust than a will.

8. You may still need to have a will when it comes to guardianship of minor children.

9. An Irrevocable Trust is generally preferred to a Living Trust because it can shield estate taxes.

10. An Irrevocable Trust can shelter asset seizure in the event of a nursing home situation as long as the assets have been given away 60 months prior to entering a nursing facility.

11. There are many different types of trusts that you should discuss with your estate-planning attorney. Do not attempt to do it on your own.

12.  When it comes to estate planning, you must have an open dialogue with your heirs even though it may be uncomfortable discussing money and death.

THOUGHT OF THE WEEK

“Worry does not empty tomorrow of its sorrow. It empties today of its strength.”

Comments

No comments on this story | Please log in to comment by clicking here