SS+D FINANCIAL NEWS AND INFORMATION

December 01, 2010

WHY EVERYONE SHOULD HAVE A TRUST

Today, there is more confusion and uncertainty about estate tax than at any time in the history of its existence. This has led many estate planning lawyers to an unfortunate decision – the elimination of trusts in all but the largest of estates. But trusts should never just be about saving estate taxes, because there are other important reasons to utilize a trust:

1.)  Trusts provide a single, comprehensive set of rules for the distribution of all assets (probate and non-probate).

2.)  Because a trust provides one set of rules, it can be easily changed without resulting in inconsistencies and unintended results.

3.)  Trusts can shield one’s estate and beneficiaries from claims of creditors or spouses.

4.)  Unlike Wills or other non-probate devices, trusts can address the possibility of unusual circumstances (such as a child predeceasing a parent or two spouses dying simultaneously) and prevent unexpected and unwanted distributions of estate assets.

5.)  Trusts are private. In this age of the internet, all assets distributed under a Will are listed online and exposed to the prying eyes of nosey neighbors and scammers hoping to defraud people who have recently inherited money.

6.)  Less than half of the assets in most estates are governed by Wills. The rest are non-probate assets (such as retirement plans, annuities, life insurance, and joint and POD accounts) that are distributed according to beneficiary designation forms. Unfortunately, these forms are often completed with little thought and do not take care of unexpected or unusual situations. Naming a trust as a beneficiary on these forms solves this problem.

7.)  Trusts can protect the heirs of a first marriage while providing money for the spouse from a second marriage.

8.)  Trusts can provide for a special needs child who has not even been identified at the time the estate plan is being designed.

9.)  Trusts can protect us from ourselves when we reach a point where we are too easily influenced by those around us.

Given all of these reasons that trusts are good, it is amazing that many estate planning lawyers have stopped preparing trusts for people just because they don’t need to save estate taxes.

For more information about how a trust would improve your Estate Plan, contact one of SS+D’s estate planning lawyers – Michael Moloney, Deb Hunt, or Heather Welbaum – at (937) 222-2500.