Do you really need a trust?

Although many people equate “estate planning” with having a will, there are many advantages to having a trust rather than a will as the centerpiece of your estate plan. While there are other estate planning tools (such as joint tenancy, transfer on death, beneficiary designations, to name a few), only a trust provides comprehensive management of your property in the event you can’t make financial decisions for yourself (commonly called legal incapacity) or after your death.

One of the primary advantages of having a trust is that it provides the ability to bypass the publicity, time, and expense of probate. Probate is the legal process by which a court decides the rightful heirs and distribution of assets of a deceased through the administration of the estate. This process can easily cost thousands of dollars and take several months to more than a year to resolve. Or course, not all assets are subject to probate. Some exemptions include jointly owned assets with rights of survivorship as well as assets with designated beneficiaries (such as life insurance, annuities, and retirement accounts) and payable upon death or transfer on death accounts. But joint tenancy and designating beneficiaries don’t provide the ability for someone you trust to manage your property if you’re unable to do so, so they are an incomplete solution. And having a will does not avoid probate.

Of note, if your probate estate is small enough – or it is going to a surviving spouse or domestic partner – you may qualify for a simplified probate process in your state, although this is highly dependent on the state where you live and own property. In general, if your assets are worth $100,000 or more, you will likely not qualify for simplified probate and should strongly consider creating a trust. Considering the cost of probate should also be a factor in your estate planning as creating a trust can save you both time and money in the long run. Moreover, if you own property in another state or country, the probate process will be even more complicated because your family may face multiple probate cases after your death, one in each state where you owned property – even if you have a will. Beyond the cost and time of probate, this court proceeding that includes your financial life and last wishes is public record. A trust, on the other hand, creates privacy for your personal matters as your heirs would not be made aware of the distribution of your assets knowledge of which may cause conflicts or even legal challenges.

A common reason to create a trust is to provide ongoing financial support for a child or another loved one who may not ever be able to manage these assets on their own. Through a trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide. Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction, or encouraging irresponsible behavior that you don’t find desirable. A trust can also come with conditions that must be met for the person to receive the benefit of the gift. Furthermore, if you ever become incapacitated your successor trustee – the person you name in the document to take over after you pass away – can step in and manage the trust’s assets, helping you avoid a guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a serious, chronic illness. Unlike a will, a trust can protect against court interference or control while you are alive and after your death.

Trusts are not simply just about avoiding probate. Creating a trust can give you privacy, provide ongoing financial support for loved ones, and protect you and your property if you are unable to manage your own assets. Simply put, the creation of a trust puts you in the driver’s seat when it comes to your assets and your wishes as opposed to leaving this critical life decision to others, like a judge. To learn more about trusts – and estate planning in general, including which type of plan best fits your needs – Contact our office today at 832.408.0505

The Real Cost of Caring

Dealing with the financial stressors of caring for an aging loved one can affect your ability to provide them with the care and compassion they need. It can also put the security of your financial future at risk.

To mitigate these concerns, consider these useful tips to help you make informed decisions about how to protect your future retirement plans while caring for your senior loved one.

Don’t Leave Your Job

Many adult children end up putting their professional lives on hold to become a primary caregiver for their elderly parents. Financial experts advise against this because of the sudden loss of income and valuable benefits. Consider caregiving options that support your ability to maintain your earning potential.

Create a Budget

Review the actual costs of being a primary caregiver before making any drastic changes like leaving your job. Also, consider whether your loved one’s assets can be utilized to cover some of the costs involved in providing care inside or outside the home.

Look for Benefits Elsewhere

Free or low-cost benefits that can help cover some of the costs of caregiving, such as home health aides, are often available to seniors. Similarly, review the limitations of public benefit options such as Medicare and Medicaid.

Consider Relocating Your Parent

It is common for seniors to prioritize remaining in their own home while they age. Although understandable, this can be a very expensive and often unrealistic option. If opening your home to your loved one is an option, it can be far less expensive.

Seek Professional Help

Geriatric care managers can help you establish a caregiving plan that meets your needs and assist you in identifying resources to save time and money.

Protect Your Parent from Scams

Financial elder abuse is on the rise, so make sure your loved one’s finances are protected. Telephone, postal mail, and internet fraud is common and can be easily avoided when a close relative or friend is keeping tabs on the accounts of a senior loved one. Consider talking with your parents about stepping down as Trustee of their trusts and letting you step in now to monitor their finances, and if they do not have a Trust holding title to their accounts, meet with us now to look at whether it makes sense to set that up for them (and for you).

Discuss the Future

Now is an opportune time to review your loved one’s wishes for his or her estate and consider your own financial goals and how helping to care for a loved one might affect them.

Caring for a loved one can take a toll, both financially and emotionally. If you are ready to create a financial plan for caregiving, start by sitting down with a licensed Estate Attorney. An Estate Attorney can help you plan for changes in life at every stage. Our Family Wealth & Legacy Planning Session guides you to protect and preserve what matters most. Before the session, we’ll send you a Family Wealth & Legacy Inventory and Assessment to complete that will get you thinking about what you own, what’s most important to you, and what you can do to ensure your family is taken care of.

 This article is a service of Gratia P. Schoemakers, Estate and Business Attorney. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth & Legacy Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 832.408.0505 to schedule a Family Wealth & Legacy Planning Session and find out how to better protect your family.