Trusts are amazing tools that most people don’t really understand. That’s okay. There’s not a lot of info out there that explain them in terms that make sense. So, before you can determine whether a trust is right for you, let’s look at what a trust is.
I always find it best to explain “the trust” by way of analogy. Imagine that you have a bunch of coins. Each coin represents something that you own—one of your assets. Let’s say that you have a bunch of coins and nowhere in particular to put them. So, these coins are strewn about and difficult to find. Not only are they hard to locate but their value and who they’re supposed to go when you pass away is not readily clear. You pass away with all these wayward coins and someone has to come in and find them all and also go through the process of finding the person they’re supposed to go to. We call that someone your “executor” and that process “probate.”
Now Imagine that all of those coins are in one place, like a treasure chest. In that chest, sitting neatly on top of the coins are a list of the coins and who they are supposed to go to. Further, a trusted individual has the key to the chest and they can pass out each coin to whomever it goes to immediately with no process necessary. We call that trusted person the “Trustee” and the lack of process “probate avoidance”.
This is how a trust works. Trusts also have other attributes where they can protect assets other than probate avoidance (think shutting the lid on that treasure chest and locking it); and leaving behind a legacy that the trust creator can control (think leaving each coin in a separate mini chest for each beneficiary).
Is a Trust Right for You?
The answer is one of my favorites to give: it depends. There are other ways to avoid probate than trusts, but they’re asset specific. For example, you can avoid probate with a bank account by adding a beneficiary. But that only applies to your bank account. A trust is a great tool to ensure all of your assets avoid probate.
There are also other ways to protect property but none so efficient and effective as the trust. Some people do not need trusts because they will simply not benefit. Maybe they have limited assets. However, most individuals can, in some way, utilize a trust to protect assets and ensure a retirement or inheritance is preserved. If you have significant money or property that you wish to protect, a trust is probably right for you.
If you have more questions about wether a trust is right for you give us a call at (704) 259-7040 or visit our website at www.mcelderlaw.com.
Brenton S. Begley
Elder Law Attorney
McIntyre Elder Law
“We help seniors maintain their lifestyle and preserve their legacies.”