Trusts are an excellent vehicle for many individuals and couples.If you want to avoid probate, the court procedure at the time of a person’s death, a Trust is a method to do this. Additionally, a Trust gives a person protection if they are unable to manage their financial affairs themselves. There is a court procedure called a conservatorship that is needed if someone is unable to manage their own financial affairs and does not have documents in place to allow for this.
A Trust appoints a person to pay bills, file taxes and manage all of their financial affairs if they are unable to. Additionally, a person who is having health problems or is of an older age can appoint someone else as Trustee or manager of the Trust for them. Additionally, if a person who needs assistance in managing their stock portfolio, rental real estate or other complex assets can choose to appoint a bank, trust department or another person to manage for them under the Trust.
A Trust for a married couple can double the amount the couple can leave to each other people such as children without estate tax. This can be very helpful with our changing climate and the changing estate tax laws in the future. A Trust also allows people who own real estate in several states to place all of the real estate in the Trust and avoid probate in all of the states. For people who have a second home in another state, this is particularly helpful. A Trust has a provision for a Trust for young people. If a minor inherits more than $10,000 there is also a court procedure called a conservatorship, which can be avoided by having a Trust in place.
Many people will have a Trust until age 25 for young people, so that college education can be paid while managed by someone else. The child then receives what is left outright at age 25. The outright distributions can be staggered so that they receive one half at 25 and one half at 30, or whatever ages you prefer. If someone might challenge you Will, a Trust provides added protection from challenges with Courts upholding Trust provisions. A married couple can receive full step up in basis for any property that is community property in their Trust.
Editor’s Note: Editor’s Note: This article was submitted by Kay Richter, Attorney at Law. Kay focuses on Elder Law and Estate Planning. She can be reached at 520-318-1301.