Issue 35.10
There are many reasons you should have a Trust. One reason is to avoid probate. Probate is the court procedure to appoint a personal representative, determine who gets your property, and oversee its distribution. This can be a slow and costly process even with a modest and uncomplicated estate. If you transfer your assets to a Trust during your lifetime, when you die they belong to your Trust, not to you. Your assets won’t have to be probated to be given to the people you have named in your Trust. This keeps the courts out of your family affairs, and keeps your estate plan private and confidential.
You may want a Trust to avoid the potential for double probate if you own real estate in more than one state. Each state in which you own real estate will require probate in each of those states. If you own real property in different states, you can put all of that property in your Trust so there will be no need to probate any of that property when you die. The Trust will continue to own the property at your death, so there will be no reason for the different states to become involved in how the property is distributed.
You may want a Trust to provide for minor children. If you leave assets to minor children in a Will, your children will get full access to that property when they reach the age of majority. In most states, that age is 18. An 18 year old may not be ready to manage inherited money. With a Trust, you decide what age a child is to receive their share – 18, 25, 35, 70, or any other age.
You may want a Trust to provide for a disabled child, or a child who should not receive money outright due to alcohol or drug abuse. Using a Trust, you can name another person to be the Trustee of that child’s money to make sure the money is used for that child’s benefit. You gain the assurance that the money will be there for the child’s needs, and that it will be used appropriately and not squandered. You protect the child’s share for the benefit of the child when you use a Trust.
You may want a Trust to avoid paying estate taxes. The estate tax is scheduled to return in 2011 and will affect you if your estate is worth over $1 million. A Trust can be used to exempt some or all of your assets from the estate tax. You can also receive immediate tax benefits by setting up a Trust that provides income to you for your lifetime, but makes a gift to charity at your death. Doing so provides income and estate tax benefits for you and your family.
You may want a Trust to avoid having your heirs challenge your Will. A Trust can provide extra protection to keep that from happening. To prove a Will is invalid, the challenger has to show that you were incompetent at the time the Will was executed. But since you interact with your Trust throughout your life, and move assets into and out of your Trust from time to time, it is more difficult to prove your Trust is invalid. We usually have repeated assurances that you intended for your trust to be effective at your death. If you set up a Trust, it is tougher on the challenger to claim that you were incapacitated, not only when the Trust was set up, but also during every transaction that you carried on during your lifetime. For this reason, your Trust is easier to defend than a Will.
Your Free Consultation is available by calling Sean Sullivan, a shareholder with the firm of Brindley Sullivan, PC, 382 S. Bluff St., Ste. 150, St. George, UT 84770, (435) 673-9220.