Is Your Living Trust Really Going to Work For the People You Love?
Traditionally, one of the primary reasons for establishing a living trust has been to avoid probate. But there are a few more benefits of a living trust that can help you do much more than that if it’s set up right:
Asset protection for heirs.
One of the most significant benefits of a living trust is to protect inherited assets for heirs. For example, minor children are not allowed by law to inherit property. Instead, a guardian is appointed by the state to hold the property for them until they reach the age of 18. However, most parents would agree that even 18 is too young to manage a significant inheritance. Executing a living trust allows you to control how and when an inheritance is distributed and to name a trusted person to serve as trustee. In addition, a living trust can be especially useful in protecting assets from spendthrift heirs, creditors or an heir’s potential divorce, if it’s set up right.
Most living trusts we see distribute assets outright to kids at 25, 30 and 35 instead of keeping assets in trust for the life of the beneficiary — while giving the beneficiary control of the assets — via a lifetime asset protection trust. This type of planning is still fairly unknown to most attorneys, but we’ve got specific training to ensure that what you leave to your kids will not be at risk from their future divorce, lawsuit, bankruptcy or other creditor matter.
Ensure none of your assets are lost.
The vast majority of the time that a living trust is created, one of the most important and valuable aspects of creating trust are lost — and that’s making sure that when you become incapacitated or die that your loved ones stay out of Court and the assets you’ve worked so hard for make it to the people you love aren’t lost along the way. If your assets are not titled in the name of your trust, that won’t happen. Your loved ones will have to go to Court to take ownership and control of your assets. And, they may not even be able to find your assets to do that. There are currently billions of dollars in assets sitting in the State Departments of Unclaimed Property because people die and their loved ones didn’t know what they had left behind. One of the things we do in our office is preparing a Family Wealth Inventory for your family to ensure your assets are easily located by your family and as long as you keep that up to date or join our membership program so we can do it for you, you’ll never have to worry that what you are working so hard to create will be lost when you are gone. Plus, when you have a relationship with our office, we’ll make sure your loved ones know just what to do if anything happens to you.
Incentivize your children to grow your wealth, not squander it.
As we mentioned, most trust plans are crafted to distribute assets outright to kids when they turn certain ages, whether they are ready for it or not. And chances are that if you die when your kids are still young, they will not be ready to fully inherit your wealth at an early age. We recommend you use your living trust to properly prepare your children to receive their inheritance. That means allowing them to be a co-trustee for some period of time before receiving full control of their trust assets. It means introducing them to us if we are your lawyer, so we can begin to guide them during your lifetime and not wait until after you are gone.
You may want to consider making small lifetime gifts into an irrevocable trust for their benefit so you can start to teach them how to grow the assets while you are living and enter into a partnership for creating more family wealth that can last for generations.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about a Family Wealth Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.