To Trust, Or Not To Trust*
by Andrew M. Brandt, Esq.
Are they buzzwords? Only for the wealthy? Is it one more parenting skill that we are supposed to be working on? Use of the word “trust” has exploded in the media recently. Countless television reports, blogs, and articles ask us to trust. Trust our President, trust the NSA, trust one another, and protect everything by creating a trust. But why? Or more importantly, how?
When it comes to end-of-life planning, trust is a central issue. Not only are you deciding who you trust to take care of loved ones and personal treasures after you are gone, but you are also confronted with the decision of whether or not you need to create an actual trust. But what does creating a trust have to do with all of this talk about trusting someone else?
Well as it turns out, everything. When you ask your attorney to draw up a trust for you, you are entering into a contractual agreement with someone called a trustee. This trustee is a person who promises to take care of your stuff, including property and money, and to do with your stuff as you asked them to do. In other words, you are trusting the person who you name as trustee to do right by you.
For a lot of us though, trusting someone else with all of our worldly possessions is not an easy task. Not only is it difficult to decide what possessions of ours we are going to trust someone else with, but it is darn near impossible to decide who we are going to trust that stuff with.
Luckily for us, the decision of who to trust can be as easy as trusting ourselves, while we are alive that is. Living Trusts allow you to actually name yourself as trustee during your lifetime and then name a person to step into your shoes as trustee after you pass.
One of the great benefits of living trusts is that they can be very effective in making sure you pass down a larger share of what you have spent your life working for by reducing estate taxes, court costs, and attorneys’ fees. Another great benefit is that a living trust ensures that your wishes will be followed.
When making sure your wishes will be followed, your advisors such as your attorney, financial advisor, and insurance advisor immediately seem to start talking in a foreign language – Wills, Revocable Living Trusts (RLTs), Irrevocable Trusts, Powers of Attorney, Living Wills, Whole Life, IRAs, and so on.
But wait! This looks more like alphabet soup and less like your wishes, doesn’t it? Or does it. Although they have names like they came from a bad Star Trek episode, everything from a Will and a Revocable Living Trust to insurance and financial products can make sure that your wishes are sure to be followed.
For example, let’s say that you have three things that you want to make sure happen after you’re gone. First, you want to make sure that your spouse gets as much as possible out of the retirement savings that both of you have worked so hard to put aside. Second, you want to make sure that your two kids have some money for a down-payment on a house someday. And finally, you want to make sure that your son gets your baseball card collection (with the Mantle rookie card of course) and that your daughter gets your ’68 Mustang Fastback.
This is where your advisors start to strain-out the alphabet soup into a plan that not only makes sense, but works to achieve your three goals. For the retirement funds and the nest-egg for your children, your financial and insurance advisors can work to provide you with the best options that fit your financial picture, which often come with the ability to directly name who is to receive the retirement funds if you pass on. This is often called a Beneficiary Designation or Transfer on Death designation.
Now that the money has been taken care of by your financial advisors, what about your car, house, checking account, and of course, the baseball card collection? Here is where your attorney will sit down with you to discuss what legal options you may have. And the options available to you are as varied as the alphabet in the soup. The reason is due to each couple and each individual having such unique life circumstances and situations, that it is best for your attorney to carefully craft an estate plan that suits your situation specifically. Although no plan is exactly the same, your attorney will likely put a plan together that involves a last will and testament, powers of attorneys, and in many cases, a trust.
When your priorities are protected and your life well planned, all that is left is to trust.
Andrew M. Brandt is an Attorney and Partner with the Stricker Law Firm, PLLC in Belmont, NC located at 203 Glenway Street, who practices in estate planning and probate law.
*DISCLAIMER: This article is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion. No attorney-client relationship is created by this message. Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area.