Updated: Aug 26
Our June Table Talk blog addressed the important topic of Asset Protection. In talking with Attorney David Streese, he mentioned that trusts were a critical part of protecting a person’s assets. For that reason, we decided to invite Attorney Streese to do a follow-up vlog and podcast on the topic of trusts. This blog is a highlight of that interview.
So, very basically, a trust is a legal relationship in which a person transfers assets to a trustee who manages those assets in accord with the wishes of the owner. More simply, a trust is like a large umbrella that holds all the assets. The trustee than distributes those assets to the beneficiaries that are named in the trust.
A trust is an important part of an estate plan, because it can accomplish some of the goals that people might have like avoiding probate, maintaining privacy, and allowing some flexibility in the way assets are distributed. It can also help with tax planning and efficiency.
Even with a trust, an estate plan should include a will as well. The will in this case is often called a “pour over will” which means any assets that are not included in the trust, would be directed to the trust.
Although many people have heard about trusts, they might not be aware that there are different types of trusts that can be part of an estate plan. The most common is a revocable trust. These trusts are valuable because they can be changed by the trustee. This provides flexibility which is desired by many people. There are also irrevocable trusts that can be valuable for those with very large estates and for those who have concerns about protecting assets from the costs of long-term care.
One reminder for people is that there is some work to do after their attorney creates the trust. The trust is a great tool, but assets have to be placed into the trust for it to be fully effective. In the long run, however, the work to fund the trust is far less than the work that would need to be done later if there was no trust.
In summary, a trust is a powerful estate planning tool. It can accomplish many goals in an efficient manner. Yet, a trust is not the ideal tool for everyone. Therefore, it is important to discuss the options with your attorney and create a plan that is right for you.
Once again, we provide this information because it’s your life, it’s your plan, it’s your legacy. Contact me at firstname.lastname@example.org to learn more, or to discuss ways you can include a gift to KML or the KML Foundation in your estate plan.