Perhaps the most common misconception among the general public concerning the areas of wills and trusts is the notion that if a couple owns less than $5,000,000.00 in assets, that they don’t need a revocable living trust. This is a false notion. For example, I recently had a fellow come to my office whose mother has just died. All she owned was a $50,000.00 condo, and had a will, which read “I leave my condo to my child”. What could be more simple and clearer than that? Well, believe it or not, the child had to go through probate before he could get the condo, and the legal fee was $2,000.00, A revocable living trust could have avoided this.
Another reason for having a revocable living trust is to protect against incapacity. In the trust, you designate who would manage your assets in the event„ let’s say, you get Alzheimer’s disease. Without a trust, court proceedings might well be necessary, and a stranger could even be designated by the court to manage your affairs.
Further, once the decision is made to have a trust, the trust can in effect allow you to “rule from the grave”! with your assets distributed the same way you would have done as if you were still alive. For example, most wills simply say that on a person’s death that his or her children inherit equally. However, think about it – once your child inhetits your money, he or she is completely free to leave it to whomever he or she wants, such as a boyfriend, spouse, or other non-blood relatives. So let’s say your daughter dies 5 years after you, and leaves the inheritance she got from you to her husband. Even if you like her husband, this could prove to be a bad result, because the husband could remarry and the new spouse could have children from a previous marriage, and now all of a sudden your hard earned money is going to support kids you never knew. Further, if you leave your assets to your son in a regular will, his wife could divorce him and take the money. A Solution is to leave you assets to your children in a lifetime trust. They could each use the money for their normal living, but would be protected, and upon death, the remaining assets would pass to the child’s children, (your grandchildren), or if none, to the child’s siblings, not to some stranger.
Another place where trusts are extremely useful is in second marriage situations.
If you simply leave your assets to your new spouse, he or she is free to leave the assets to his or her children, and not to yours, once you pass on. Instead, a trust could be used, so that your assets would be available to care for your spouse after you die, but upon the spouse’s subsequent death, the assets would pass to your children, not theirs. Don’t assume your spouse will, follow your wishes, because after you die, his or her relationship with your children could change with the passage of time.
Another use of a trust is to manage assets inherited by children who are not good with money. You could provide that the child would get only the income from his or her inheritance, for example.
Trusts can also be used to protect your children’s inheritance in the event they go bankrupt, divorce, or face a lawsuit.. And for persons with handicapped children, a “supplemental needs trust” can be utilized, to make sure the government simply doesn’t take the disabled child’s, inheritance as reimbursement for goverment benefits, and to make sure the child does not lose such benefits.
Thus, there are many reasons why a trust may be advisable for even a person of modest means.
561-998-6039 for more information contact the Law Office Of Andrew Curtis.
Offices located in Boca Raton and Fruitland Park, The Villages visit www.elderplanner.com or call 800-731-8784.