What are the Advantages of Having a Trust?
The type of Trusts we are discussing here is not designed to secret your millions away in an account in the Grand Caymans to protect it from your creditors. We are talking about a Living Trust, which is an agreement under which you (acting as trustee) hold legal title to real or personal property for the benefit of another (beneficiary). In my opinion, every person who is over 18 years old and either has dependents or has real property should consider having an estate plan, including a Trust.
Many people think that trusts are only for rich people. They would be wrong.
A Living Trust is a tool that should be considered by anyone over 18 years old who has children and/or real property. When properly formed and funded, a Trust replaces (or complements) a Will and provides for the management and distribution of your assets upon your death without having to go to probate court. During your lifetime, you have complete control over your assets, even though you would place all assets (homes, bank accounts, stocks, etc.) into the Trust (meaning the Trust is the owner of the assets). You will need to designate a successor trustee, whose job it will be to transfer the property in your Trust according to your written desires. A Trust can be changed as often as you like after it is formed. When you die, your successor trustee will simply follow your directions and may transfer your assets without having to go to court or incur those attorney fees.
The person who creates the Trust is known as the grantor. In this case, during your lifetime, you are the beneficiary of the Trust as well as the grantor. Of course, there are other estate planning tools that we would normally recommend along with a Trust. Those include a Will, a Living Will (directive to doctors whether you desire life support, etc.), a Pour-Over Will, Power of Attorney, and others depending on the scope of your needs and amount of your assets.
We recommend that clients hold all of their assets in a Living Trust, also known as an Inter Vivos Trust. Living Trusts have numerous advantages:
- Ability to manage your own assets during your life freely (just as you do now without a Trust);
- Avoidance of probate (with its costs and public disclosure);
- Possible savings of up to $5,340,000 (per couple);
- Eliminating the need for guardianship proceedings should you become disabled;
- Trusts can own real property, personal property, benefits from life insurance policies, retirement benefit plans, etc.;
- They are much less expensive than probate; and
- A proper estate plan includes, at a minimum, a Will, Living Trust, Living Will and Power of Attorney.