If you know me, you understand the passion I have for what I do. It is not uncommon for me to ask my friends about their estate plan and how it is working for them. My friends usually tell me they don’t have an estate plan, or ask me what plan I have in place. When I tell them about my revocable living trust, I usually receive blank stares followed by “Do I need one of those?”, “What the heck is a trust?”, “Do I have enough to have a trust?” or “When should I put a trust into place?”
Before becoming an estate planning attorney, I didn’t see much of a need for a plan. I didn’t have much, my family would take care of my children, and I wasn’t likely to die anytime soon, anyway. I thought verbal instructions were enough. I had no idea what a mess I would have left behind for my family to clean up. Since I have minor children, I needed to plan for them. At the very least I needed to designate guardians to raise my children if I couldn’t.
I now realize the importance of putting my choices in writing so those decisions are clear and family feuds can be avoided. My family would have my children’s best interest at heart—I have no doubt about that—but each family member has different ideas about what is in the best interest of my children.
So what is a trust and why do I need a trust?
A revocable living trust is like a box into which I put everything I own by transferring ownership to the trust. I have the ability to manage it, change its terms and receive benefits from its contents, but I no longer have assets in my individual name. A properly drafted trust will provide protection during my lifetime, avoid a humiliating court process if I am incapacitated, pass assets to my children without probate, and provide asset protection to my children. My trust even provides for my future grandchildren I hope to have some day and, of course, takes into consideration any special needs my beneficiaries may have.
Now I understand the saying, “I’d rather give a four-year-old than an 18-year-old money; at least she can’t drive anywhere to spend it!”
Without a trust at my death, my assets would be split equally among my children. Simple enough, but when each turns 18, he or she would get the money outright. By putting what I have in a trust for each of them, I control the terms of distribution. Since I have no idea what the future will bring, I build in protections today that my children may need in the future. Plus, I can always change the terms because I still hold the power to amend my trust.
In addition, without a trust, in order for the proceeds from the sale of my home to go to my children, my estate must go through probate to transfer title. But now that my home is owned by my trust, my trustee can immediately sell and split the proceeds among my children’s individual trusts, which will in turn be managed by the person of my choosing.
My comprehensive plan covers all situations, from incapacity to death, but remember that not all trusts are the same, and not all trusts provide these types of protections.
Allison Manning enjoys helping clients establish peace of mind in their estate plans and building relationships with her clients. If you would like to make an appointment to find out how we can help protect your legacy, call (520) 529-4000, or visit us online at www.KHarizona.com.