Trusts can be a good option to help your family both today and in the long run. But they are not necessary for everyone. For a quick quiz to see if a trust or a will is best for you, see our page HERE.
There is a lot of misunderstanding about what trusts are and what they can do. We look forward to talking with you about how a trust might help your family.
Advantages Of Trusts: Trusts can have a lot of advantages, like:
- Privacy: A trust does not have to be registered (though it can be), and therefore is not a public record.
- Estate taxes: It can avoid estate taxes if your estate is more than ~10 million.
- Avoid probate if beneficial (Though you may not want that)
- Mixed families: If you and your spouse each have your own children, a trust ensure that each other care cared for, and that the children also get their fair portions.
- Avoid guardianship/conservatorship proceedings if you’re alive and incapacitated. A combination of a trust and powers of attorney can protect you when you’re incapacitated and avoid the need for a court guardianship or conservatorship case.
What a Trust CAN Do:
- Hold properties in multiple states. If you have property in many states it will simplify administration of your estate after your passing. It can also avoid probate in multiple states.
- Set up payment for your care when you’re not able to do so for yourself. It can ensure that someone is there to care for you in the way you want, and that there is someone looking over that care.
- Strategically manage income tax between yourself and the trust.
- Shorten the delay in distribution after death (if administration is done correctly).
Disadvantages of Trust: Trusts are not easy and rosy. We counsel our clients carefully on the disadvantages of trusts too, like:
- Trusts are far more expensive to create initially.
- You need to keep up with the trust during your life—like ensuring you have the correct beneficiary designations, bank accounts, taxes filed etc.
- More expensive to administer after you die than a probate. There can be a longer administration with associated costs.
- Continued income tax filings as long as funded: You may need to do trust tax filings during your life, depending on what is in the trust.
What a Trust CANNOT Do:
- Avoid the work of administering the estate. The trustee or executor will still have to do a lot of administration. They still have a lot of duties and work to do.
- Avoid the cost of administration: you will still have to pay for your trustee to administer the trust, and the expenses of handling your estate.
- Avoid lawyers: Your trustee will still want to get good attorney assistance. There are actually more duties and liabilities for trustees then there are for executors. They will want advice on how to administer the trust correctly.
- Avoid creditors: Your trust will still need to pay your debts at your death. It is in fact illegal to make a trust for the purpose of hindering creditor payments.
- Avoid all taxes: If you have an estate over the current taxable amount, then we can avoid many taxes, but not all of them. Also, your trust may still have income tax obligations after your death if it earns income.
If you think a trust may be good for your family, we will be happy to talk to you. Call 303.431.0415 to set up your free 15 minute initial consultation with an attorney. Please contact us so that we can answer your questions and give you guidance to protect your family.