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Trusts need not be complicated to be useful

California residents often incorporate trusts into their estate plans. Contrary to some popular myths, trusts may have significant value during the life of the grantor, they do not require as much work to create as people might think and they can be useful for those of limited financial means.

Trusts are most often associated with minimization of tax obligations or the avoidance of probate when a person dies, but they can also play a role during the creators life, especially in a situation where the grantor is incapacitated and is unable to make financial decisions. A trust can be designed for such a situation; the grantor can give instructions regarding what should be done and the trustee can manage finances in the event of incapacity.

Moving assets into a trust is not necessarily a complicated process. According to one estate planner, naming the trust as a transfer-on-death or payable-on-death beneficiary is a simple way to do it. Relatively little immediate action is required, and the assets will avoid probate and the court costs and potential for delay associated with the process.

Furthermore, even though there are upfront costs associated with having an attorney prepare the instrument, many individuals who are not overly wealthy use the devices because they might provide significant savings later, in terms of time, money and stress on heirs, by avoiding probate. Appointing a family member to act as trustee can minimize the expense of trust administration as well. In some situations, though, it is advisable to name a bank or other entity as the trustee.

Those who have questions about the operation of trusts may want to consult an estate planning attorney. An attorney may be able to provide an analysis of the likely usefulness of a trust in a specific situation and could tailor the device to fit the goals of the client.

Source: Daily Finance, “3 Myths About Trusts That You Can’t Afford to Believe“, Dan Caplinger, September 20, 2014


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