Four Documents Everyone Needs: The Core of Life and Estate Planning

What are the Benefits of a Trust? Who Needs One?  

Overview:  Trusts are one of the most misunderstood documents in life and estate planning.  While a trust is not typically included in a discussion of the core estate planning documents, it is not far from that discussion.  There are numerous variations with respect to the types and functions of trusts, the details of which will be spared from this summary. 

What is a Trust? A trust is established when property of some sort (an account, a home, some personal property, any property) is transferred to an individual “in trust” for the benefit of some other individual, group of individuals or organization.  A trust can hold title to very little property or millions of dollars of property.  Trusts can be established during your life, at your death or after your death.  Trusts can be established to benefit you, your family, your descendants, a social or religious organization or any myriad of individuals, companies or organizations.  Put simply, a trust is a vehicle by which one person holds property for the for the benefit of another person.

General Benefits of a Trust:  A discussion of the benefits of a trust merits a lengthy and entirely separate article.  However, there is some value to understanding a few of the various reasons why someone would want or need to establish a trust.  These benefits are entirely dependent on the details of individual circumstances.

• avoidance or reduction in gift and estate taxes (so called “death taxes”)
• providing for children and other descendants in an organized and prepared manner
• increased control over property upon death
• creation of incentives for behavior and accomplishment among descendants
• increased flexibility regarding planning for incapacity and death
• creation of on-going  funding for charitable or religious organizations
• potential reduction in tax burden on life insurance proceeds
• privacy in financial and personal affairs regarding distribution of property
• avoidance of the cumbersome (and expensive) probate process

 Do I Need a Trust? Trusts are for more than just ultra-wealthy individuals.  While not everyone may need or want a trust as part of their life and estate plan, the following circumstances may indicate a need to more seriously serious consider the option of establishing some form of trust:

• you need or desire to avoid the probate process
• you need or desire privacy in property distribution (trusts are not public record)
• you want to establish on-going funding for your family or a charitable organization
• you have significant net worth (in excess of $1 million)
• you want to retain some control over the money and property you pass on

Summary

The potentially daunting nature of life and estate planning can be tamed by careful consideration, proper guidance and an understanding of the core components that make up an effective plan.  Life and estate plans do not need to be complicated or prohibitively expensive, but they do need to be taken care of.

As discussed above, a will, two powers of attorney and a health care directive form the core of any basic estate plan.  When properly prepared, these documents will help navigate difficult life events and unforeseen (or sometimes foreseen) circumstances.  Preparing these documents and addressing these matters earlier in life helps ensure that stumbling blocks and even endpoints along life’s journey will not lead to personal and family tragedy and conflict that may been avoided.

This article is for informational purposes only and should not be construed as legal advice with respect to any particular circumstance or life and estate plan.  For additional information, please contact Jim Schleiffarth, Schleiffarth Law Firm LLC, St. Louis, MO, (314) 315-4117, jks@sch-law.com.

Scheliffarth Law Firm LLC

Estate Planning that Makes Sense

Schleiffarth Law Firm  •  Jim Schleiffarth, Esq.  •  St. Louis, MO

314.315.4117  •  jks@sch-law.com  •    www.sch-law.com