Part 3 of Mansour Gavin's Estate Planning Basics series which breaks down the process of helping clients set up Trusts.

In our last topic, we mentioned some advantages to using a trust in an estate plan. It is fair to point out, of course, that there are some negative aspects of trusts that need to be recognized.

First off, setting up a trust does not mean assets are protected from the client’s creditors. With a revocable/living trust, if a client can control the assets while they are living, a creditor of the client can reach the assets. Many people think that, by setting up a trust, they are protecting their assets should they go to a nursing home later. Nursing home and Medicaid planning are a different animal from basic estate planning, and a revocable/living trust does not provide that protection.

Time and expense are also considerations. The drafting and funding of a trust agreement are not simple tasks. Once the trust agreement itself has been prepared and signed, it is necessary to have the assets transferred in to the trust, retitled to the trust’s ownership, or having the beneficiary designation changed to the trust.  While the time and expense are generally worth the effort in the long run, the client is the one who incurs them both and has to decide if it is the best option.

Creating a Trust does not mean the client does not need a Will. Wills are still necessary because there may be assets that did not get re-titled to the trust, or were forgotten and overlooked during that process.  Having a Will as a safety net to get the assets into the trust is still a necessity.

In short, like most things in life, there are advantages and disadvantages to having a trust as part of an estate plan.  For many, however, the perceived disadvantages are more of a temporary inconvenience far outweighed by the long term advantages.

In our next topic, we will look at how trusts make it possible to delay distributions, and how that may protect the beneficiaries from themselves.

You can view the first series of Wills and Probate Administration here and reach out to Dan with any questions. Our attorneys are always ready, willing, and able to meet and discuss any questions, help you articulate your plan and goals, determine the best plan to accomplish them, and then implement it. You will find that, by taking those small steps, the problem that used to lead to procrastination and uncertainty has been addressed and resolved. Learn more about Mansour Gavin’s Estate Planning & Probate group or contact us today.