Trusts are a well-established financial planning tool among the rich and famous. They offer many features to protect established wealth and power. But what advantages do they offer the ordinary consumer? Consider these two examples. Two grandfathers each had an estate worth about $100,000. Grandfather Smith had a traditional will; Grandfather Jones had a living trust.
When Grandfather Smith passed away, his executor took over everything. Items of value were appraised, then sold. Personal property, including family heirlooms of sentimental value, were sold in an estate sale. Family members were not notified of the time of location of the sale. After 15 months, $65,000 was distributed to the heirs in the form of checks. The other $35,000 was used for legal and executor fees. Because the proceedings were a matter of public record, one heir’s inheritance was claimed by the state for a disputed child support arrearage.
Grandfather Jones, on the other hand, had established a living trust. The same week he passed away, his heirs had total possession and control of bank accounts, real property and personal property. They were able to retain family heirlooms. They kept the entire $100,000. And because the trust had a spendthrift provision, heirs could be protected from creditors.
But the financial advantages aren’t the only feature offered by trusts. The living trust package often includes health care directives, durable power of attorney, and living will. These documents help prepare for situations while the settler is still alive, but partially or fully incapacitated. They can eliminate or regulate family disputes while assuring that your wishes are known and respected. Your duly-appointed healthcare representative can obtain emergency care for you in a timely manner. Your attorney-in-fact can make sure your bills are paid. Your living will clearly indicates your preferences in regard to life support and heroic measures in life-threatening medical situations.
To learn more about what a trust can do for you and your family, consult a knowledgeable estate planning attorney. This trusted financial planning tool of the rich and famous can benefit you and yours even if you don’t have a seven-figure net worth.