Estate planning is the process of setting up the management and disbursement of your assets after your death. The term also encompasses strategies used to protect your estate assets and minimize tax liability.
Last Will & Testament
Estate planning begins with preparation of a will. If you have children or anything more than nominal assets, then having a will in place is really a no-brainer. In fact, we believe all adults should have a will, even if there are no children or assets to protect.
In the context of estate planning, a living trust is a common vehicle used to avoid probate, exercise control over inheritance, minimize costs and taxes, etc. For many people, the combination of a Pour-Over Will and Living Trust is an excellent estate planning strategy.
A lot of people have the idea that setting up trusts, utilizing professional trustees and the like are really things for only the very rich. It is understandable where that thought might come from. If the purpose is to create an entity that can be used for investment activities, then it is probably true that there would need to be enough money or assets in the estate to be able to generate enough profit through investment to justify the salaries and commissions of the trustee and investment advisors.
Nonetheless, if you have not considered the advantages of a trust because you think it will be too expensive or is only for the rich and famous, you are doing yourself a disservice.
Putting together a trust is not expensive. It is just a matter of drafting the trust agreement. And, trusts can be used for many purposes other than investment.
Our firm is not a trust company. We do not invest funds or charge commissions. Our fees are charged on an hourly, as-needed basis. There are no annual fees.
The most common reasons to appoint a trustee other than yourself include _
If you set up the trust correctly, your name will not appear in the public record at all. That confidentiality can be very important for some of our international clients, or just those who do not like their personal business under public scrutiny.
Protection from Creditors
There is something called a “spendthrift clause” which, along with the overall structure of the trust, can be a very effective means of cutting of creditor liability.
Protection from Family Members and Third-Parties
Let me use a real-life example. One of our clients — a sweet, older gentlemen — was trying to enjoy his golden years, but one of his in-laws was in the habit of showing up and brow-beating him for money. We set up a trust and appointed the firm’s lead attorney as trustee.
Our client can now simply say “You will have to speak to the trustee.” He completely side-stepped the whole problem in a way that avoided conflict with his wife and her relatives.
Professional Administration (no rookie mistakes)
You can appoint a friend or family member as your trustee. Certainly, that is less expensive and, sometimes, it does make good sense to do so. Just bear in mind the trustee has to sign off on all trust business, and that will sometimes require some expertise and legal knowledge. Obviously, a licensed, experienced attorney is a better choice for this role. And, the cost is not as great as you might think.
Let’s face it. At some point, you may just want to enjoy your retirement without having to worry about administration of your estate. Under our cost-effective plan, it makes much more sense to appoint an attorney-trustee and let him or her monitor and guide trust activities.