If you receive a recommendation to get a trust, Find out why and if it’s the best option for you

October 9, 2021- I have been contacted on several occasions to prepare trust documents, i.e., a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.  When I ask why, the reason is that the person wishes to avoid probate, i.e. court involvement for a deceased person’s assets to pass to his heirs or beneficiaries.  After asking a couple of more questions, it usually turns out that a trust is unnecessary, and that other options exist where they can still obtain their goal of avoiding probate, and doing so in a way that better suits their needs than a trust.  

I am not against trusts, but I have had appointments where people had trust documents prepared, before seeing me, that looked like they were the length of War and Peace and they did not understand any of it.  I’m not saying the trust was always unnecessary in this case or even that the document wasn’t explained to them, but if you find yourself in the situation where you receive a long document that you find complicated, before you sign it, ask for an explanation of why this document best fits your needs, and before it is even drafted for your review, ask if there are any alternatives.    

Again, I am not against trust, but I have experienced situations where someone had a trust prepared, but not know that they have to fund the trust.  Funding a trust is just another way of saying retitling assets in the name of the trust or transferring assets into the trust.  If the funding doesn’t happen, and assets are in the deceased sole’s name with no beneficiaries, then probate will be necessary.  I am not saying that they were never advised to fund the trust; but for some reason this step sometimes just does not happen.  Also, many people have more assets than what they may realize, and they may forget to put some of their assets into the trust.  These assets may not have all the zeros behind them that they would like, but they are assets nonetheless, and if they are not retitled or transferred into the trust, probate may be necessary.

I have other similar trust stories, but I’ll end here because as I have mentioned a few times, I am not against trusts, as they can definitely be helpful for certain tax considerations or when it’s beneficial to have an individual control assets if a beneficiary is a minor or perhaps not in a place to receive and handle assets, just to name two examples.  The bottomline of this article is that when you are estate planning, or in any other areas of life, ask why a recommendation is being offered and find out if there are any alternatives.  The more information you have, especially the “why’s” and the other options, you’ll be in a better position to make the best decision for you.

This article is purely given for general informational purposes and not to provide legal advice or create an attorney-client relationship.