Trick or Trust

For many people, the idea of a trust triggers the seemingly negative image of spoiled children, living off the wealth they inherited; wealth these ‘trust-fund babies’ didn’t earn. While that may have been true in the past, trusts such as revocable living trusts have become a staple of comprehensive estate planning for far more than just the super-rich. Trusts can be an extremely useful tool to not only accomplish many goals, but also avoid the ‘tricks’ that can befall us:

TRICK: An incapacitating event leaves you unable to manage your financial affairs, and you haven’t appointed a durable power of attorney to manage them in for you.
TRUST: Trusts can be used to provide an efficient mechanism for the management of an individual’s assets during his or her lifetime, even if the trust creator loses capacity. Funding the trust, which is the process of transferring or re-titling assets into the name of the trust, gives the appointed successor trustee the power to take over management of the trust assets. Plus, you can define what constitutes the incapacitating event.

TRICK: After your death, your family learns they must now navigate the county court system to properly pass your assets to your heirs.
TRUST: Trusts can avoid the necessity for probate administration of the assets owned or titled in the name of the trust. While the administration process is not complicated, it does require a certain level of familiarity. Administration can also be inefficient and costly. Properly funded trusts can minimize and even avoid the administration process.

TRICK: The administration of your estate in the county in which you live is a public process. Assets, account values and other personal information about you and your estate are openly available to the general public.
TRUST: Privacy. Trusts, at their most basic level, are like personal contracts, and since trusts can result in avoidance of administration, the terms of these ‘contracts’ are not public record. This means only you, your trustee and your beneficiaries are aware of the terms, assets and holdings of the trust.

TRICK: Assets left for the support and benefit of your heirs are gobbled up by creditors or unsavory people who manipulate and influence them.
TRUST: Protection. While revocable living trusts have limited creditor and tax protections during your own lifetime, such trusts can be constructed to provide significant creditor or tax protections for the beneficiaries. Notably as this relates to minor (and sometime adult) children, trusts can give you a certain level of post-mortem control over how the trust assets are distributed and protect the assets from mistakes that children sometimes make.

At this time of year, most people enjoy a “trick” or two. But when it comes to your estate and what you want to leave for your family, tricks like the ones above are not enjoyable. Luckily, trusts provide an efficient and inexpensive means to avoid tricks that negatively impact your family. Don’t be tricked this holiday season; talk to your estate planning attorney about trusts and other options to address your family’s needs.

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Written by

David T. DuFault

Principal

“There is nothing so sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor, and all do right for nobody owes any public duty to pay more than the law demands; taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.” Judge Learned Hand. I had been practicing law for a number of years when I rediscovered this quote from Judge Hand. At the time, I was starting a program to obtain a Masters in Accountancy with the intention of using it to better serve my clients in estate planning and corporate transactions. Many years have passed since then but I am still struck by Judge Hand’s phrase “so arranging one’s affairs.” As both an estate planner and a corporate attorney, my primary focus is assisting my clients in so arranging their affairs to achieve their specific goals. In estate planning, those goals often involve providing a legacy for a surviving spouse or child and making sure an appropriate person is named to serve as the guardian of a minor child. A will, durable power of attorney, and healthcare power of attorney with advanced directive are all necessary documents in an effective estate plan. Because everyone’s circumstances are different, certain estate plans can require the use of revocable or irrevocable trusts. In either case, the client is entitled to a comprehensive plan to achieve his, her or their goals. My role is to provide that plan as efficiently and effectively as possible. Doing so often involves teamwork. I’m committed to working with all my clients’ advisors to craft a plan, to arrange their affairs, to achieve that end. Corporate transactions also require arranging one’s affairs, but instead of passing on a legacy, the business owner needs to ensure the continued operation and success of his business venture. From starting a new business to expanding an existing business to acquiring or merging a business, proper planning is imperative for continued success. I provide that planning to my clients by advising them on business structures, operating and shareholder agreements, and investigating the different options available to an expanding business. From start-up to winding-down, I help business owners with tools they need to succeed. Judge Hand was talking specifically about taxes when he wrote the statement above, and taxes can play a key role in both estate planning and corporate transactions. My experience allows me to identify those tax implications in both estate and business planning. But whether taxes are the primary focus, or merely a secondary consideration, the purpose of good planning is the arranging of one’s affairs. I’m committed to providing my clients the highest level of service in handling their estate and corporate needs. From beginning to end, I will counsel and advise them as they plan for some of the most important decisions they will make.

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