Pros and Cons of having a Trust

[LakeRat1]

Is a WILL enough, or do you recommend setting up a Trust? We have 3 adult children and all of our Assets go to them. We do all of our banking through Fidelity, checkin & an IRA. We have 3 Properties, 2 Condos in KS, 1 in Florida. The Florida home is our resident home, our daughter lives in one condo, and the other condo is a rental. Our daughter is on the deed of the condo she lives in, as well we stay there during the summer months, as this is our 2nd home. We have two vehicles ..... Is there really a need for a Trust? What other options should I consider ....... We did have living Wills, but they are 25+ years old and out of date ....... Thanks your thoughts

 

[OldShooter]

SGOTI is not a lawyer. You really should talk to a trusts & estates specialist lawyer. Flags I see are (1) daughter on the deed of the condo may not get the basis step-up. (2) not sure what the content of your "living wills" might be, but while they may be old and out of date, they may still govern or at least cause confusion. (3) an irrev trust can protect the assets your children inherit if there is any chance of divorce, judgments, etc. This may or may not pertain. Again, a specialist lawyer lives and breathes this stuff and the cost for a consultation and getting the right paperwork may well be well under 1% of the assets you're trying to protect. Cheap screwup insurance IOW.

 

[Winemaker]

DW and I just went to rewrite our wills this past week. Our last will had trusts involved as DS was married to a "crazy A$$ wildebeast", and we were trying to protect the grandkids from her evil ways in case of his early demise (God forbid). He recently divorced, so she is out of the picture , finance wise. Our attorney just recommended using beneficiary forms for all investment assets, and our real estate divided 50/50 with his sister. So no trusts for us.

I was looking at the county website for a real estate issue in the neighborhood, and seen that two local attorney's in our neighborhood, had their homes in his and her names, and no trusts involved with them..

 

[silvor]

Is a WILL enough, or do you recommend setting up a Trust? We have 3 adult children and all of our Assets go to them. We do all of our banking through Fidelity, checkin & an IRA. We have 3 Properties, 2 Condos in KS, 1 in Florida. The Florida home is our resident home, our daughter lives in one condo, and the other condo is a rental. Our daughter is on the deed of the condo she lives in, as well we stay there during the summer months, as this is our 2nd home. We have two vehicles ..... Is there really a need for a Trust? What other options should I consider ....... We did have living Wills, but they are 25+ years old and out of date ....... Thanks your thoughts

Seems like you could TOD most of your assets. Not the real estate in FL though. The other 2 properties, maybe depending on the state.

 

[marko]

[Hitting Ctrl + Alt + 22 for my pre-typed, usual response]

You need to talk to an estate attorney who understands the finer points in your state. Always money well spent.

 

[ponyboy]

Trust protects from long term care taking your assets, at least in my state.

 

[FLSUnFIRE]

I encouraged my folks to establish a revocable trust and am thankful they did -it gives them and me peace of mind. It should make managing their affairs easier when I need to step in either to incapacity or death (I'm a cotrustee now along with one of them and have DPOA along with a few institution specific POAs in place). Pretty much all assets except their daily checking account and IRAs are in the trust's name (named beneficiaries) with a spillover will in place. It gives them some additional control over the assets -for instance the trust will establish trusts for the benefit of the heirs upon both of their deaths which will help keep funds from being claimed by spouse's/partners in the event their relationships deteriorate. One of my parents has cognitive decline and having the trust reduces the odds of elder financial abuse if they end up living longer. While they could in theory be conned into revoking the trust by an evil actor; they are not a trustee and have no immediate access to the funds that are in trust accounts -and sadly not really aware of what is in there at this point either.

They used a firm (not just an individual although we dealt with a single attorney) specializing in estate law in their state and there will be someone there if needed to help me execute my duties as trustee if I have issues.

 

[mrfeh]

Been researching this topic off and on the last couple years...it depends on your personal situation and state of residence.

Sorry that's not very helpful, but it's accurate.

 

[Dtail]

Not a popular choice here, but my mom has an irrevocable trust set up. However perhaps a revocable trust along with TOD and beneficiaries.

 

[Midpack]

We have a trust to make things easier on our heirs. To me it’s selfish to do otherwise, they have lives to lead. We don’t want them to have to jump through any probate hoops to settle our estate.

My parents had a trust, made everything very easy for my sister and I. IMO you should consult an expert, live or online, not anonymous strangers on a forum.

Estate Planning: Who Needs a Trust and Who Doesn’t?

Knowing the differences between a revocable trust and an irrevocable trust can help you decide if you need one and, if you do, which kind.

www.kiplinger.com

 

[ncbill]

Trust protects from long term care taking your assets, at least in my state.

That requires setting up an irrevocable trust, and transferring assets, and waiting 5 years before applying for Medicaid to cover LTC (there are some limited exceptions to that timeframe)

Most here are talking about revocable living trusts (RLTs) which normally become irrevocable only on the grantor's death.

I used RLTs (I was co-trustee, not successor) with a couple of relatives for whom I was primary caregiver once they were diagnosed with their respective, terminal illnesses, because it made it easier to manage their affairs.

The RLTs made it easy to transfer any assets remaining to the beneficiaries.

 

[OldShooter]

... Most here are talking about revocable living trusts (RLTs) which normally become irrevocable only on the grantor's death. ...

Yes. It's a common problem in these threads to mix up rev trusts and irrev trusts. In our case DW and I have rev trusts for convenience at death. At that point they become irrev trusts but in some sense they act like wills and direct what is to be done with the assets in the trusts. In our case, they create trusts for the grands and distribute assets to some charities and to DS. We could have created one or more irrev trusts at any time prior to our death(s) but our circumstances haven't required that.

So be careful to understand the context when someone uses the word "trust" alone. The OP's post seems to refer to rev trusts, sometimes aka "living" trusts.

 

[Exit 2024]

With 3 kids in the picture I would go with the trust, going through probate may open can of worms if one of the children will feel (or will be made to feel by spouse or lawyers) that his/her inheritance is not equal to the others.

 

[Kings over Queens]

Is a WILL enough, or do you recommend setting up a Trust?

What can or will the Trust do or accomplish for you that direct beneficiary arrangements and your will won't accomplish?

Really hard for anyone to recommend one way or the other.

We have his/her revocable trusts and an irrevocable trust that were established when our kids were young, and they served their purpose then. Today, with 3 adult kids, direct beneficiary designations seem reasonable enough.

 

[Dash man]

Using just a will requires probate. Having real estate complicated things, and an estate attorney will likely recommend a trust. Your daughter being on the deed is typically not recommended. She misses out on a stepped up basis when you pass and can open up a liability can of worms if someone is in a lawsuit situation.
Speak to an estate attorney to figure these things out.
We have two homes with our sons living in them with their families. They will inherit the homes from our trusts when we pass.
Another purpose of a trust is to set up trustees to handle your finances if you become incapacitated. You can also set up a trust protector to fire and replace a trustee if they are not doing their job properly. Our trust protector is our attorney. Our trustee will after we’re both gone will be Schwab Trust Company. This way our sons won’t have with deal with the heavy lifting.

 

[Lewis Clark]

Probating a will is a very public procedure, for anyone interested in the proceedings.

A trust allows much more privacy since distributing assets after a death by trust is not a public proceeding.

 

[jgrdarrash]

Incapacity/ cognitive decline is something to consider along with your spouse remarrying after you die and leaving everything to their second spouse and nothing to your children. It happened in our family and is a reason we have a RLT

 

[Kings over Queens]

Here is a "pro" side comment for a trust.

A trust that disburses money slowly allows your heirs go kind of "grow into" new found wealth. We had a family discussion last night and all 3 of our adult kids (24, 25 & 27) preferred having the money set aside and managed initially. Their reasoning is that they would be dealing with the shock of losing both parents AND coming into money would be too much, and having the buffer for a few years would allow them to grow into it. Also surprising, they prefer professional executors and trustee's over trusted family to retain a sense of privacy and longevity.

Food for thought.

 

[Ronstar]

Following this thread. I'm considering a trust as well. We have wills from 25-35 years ago, and think we need an upgrade.

No kids, only real estate now is our home. No unusual income or assets - just IRA's. But assets exceed Illinois limit of $4m for estate tax. I'm reading conflicting info on if a trust helps mitigate the Illinois Estate Tax.

MIL has had a trust for decades, and DW and I helped her get it redone 5 years ago. The eldercare / trust attorney seemed to indicate at the time that we should get one.

 

[OldShooter]

Here is a "pro" side comment for a trust.

A trust that disburses money slowly allows your heirs go kind of "grow into" new found wealth.

We have a related situation. 55YO DS will inherit $500K to $1m depending. He is very happy that we are setting up a professionally managed trust with an FA firm that we know and trust, because he has no financial experience or skills. He would be vulnerable to some "trusted" guy from his church selling him an indexed annuity or some other barely legal swindle. Absent that risk DS also doesn't have a clue about asset allocation, investment options, etc., so would tend toward leaving any swept cash in money market funds forever. The FA will protect him from himself.