Properly Maintaining Trusts

Last Updated on Tuesday, 19 September 2017 11:32 Written by Chris Griswold Tuesday, 19 September 2017 11:32

Trusts….  They’re a great tool for basically everyone.  They’re private and not filed of record – like a probate, they retain better control over the process of administering a person’s estate, as opposed to giving that control over to a judge in probate, and are cost-effective too (as opposed to an expensive probate process).  I write lots of trusts for people, and I just wanted to put out a few helpful reminders about how to properly run and maintain any trust.  Helpful information for everyone (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

Properly Maintaining Trusts

Question #1:  I just formed a trust, what sort of insurance considerations should I be aware of?  After you’ve formed a trust, title to your personal residence (and any other properties that you’ve deeded into the trust) will be changed over to the name of the trust (or they should be, read more below).  This creates the need to change up the name in which the property casualty insurance is held on your home and other properties.  Accordingly, be sure and add the name of your recently formed trust as an additional insured on your home’s/properties property casualty insurance policy(ies).

Question #2:  Will my living trust protect my estate in the event my spouse or I have to go into a nursing home or other long term care facility?  No.  In other words, your estate may have to be “spent down” before either you or your spouse will qualify for Medicaid or other government benefits.

Question #3:  Does my trust somehow later protect my assets from a bankruptcy or the claims of creditors?  Usually, no.  The assets in your trust are still subject to any creditors’ claims, just as they were before the creation of your trust; just as they would be in any bankruptcy proceeding (which now has a 10 year reach back mechanism for bankruptcy trustees to employ in avoiding fraudulent transfers which are made prior to the voluntary filing of a bankruptcy petition).

Question #4:  Does my trust somehow later protect my assets from claims of my spouse (or such spouse’s creditors) in the event of a divorce later on?  No.

Question #5:   I’ve recently formed my trust, how should title to my assets be titled?   Property remaining in or titled in either: i) an individual’s name, or ii) the joint names of you and your spouse may still be subject to probate at the time of your respective deaths.  So, be sure to re-title all property into the name of your trust, so as to avoid probate (which is one of the biggest benefits of forming trusts).

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Trust Talk

Last Updated on Thursday, 14 July 2011 04:02 Written by Chris Griswold Friday, 1 April 2011 08:40

When your last name is “Griswold,” you get asked a lot of questions.  One of those is “…hey, is your family anything like the one in the movies?” Another one, given my line of work, is “…what’s the difference between a Trust and a Will?” There are several differences.  Those of you who are yearning for learning, read below….

Trust Talk

Without getting too complicated, the best way to get a handle on how Trusts (a/k/a joint, living, revocable trusts) and Wills (a/k/a Last Will and Testaments) differ is to set it out like this:

1)      Probate.  If you have a Will and (for the lack of a better word) “die,” the ones you love and leave behind will have to “probate” your will.  Probate is a court-driven process whereby a personal representative is appointed and letters testamentary (the written authority of such personal representative to act on behalf of your estate and approved by the judge) are issued, along with other required procedures.  The deal with probate is that it usually takes a lot of time.  With a Trust, there is no probate.  In essence (and outside of minor, legal procedures), the transfer of your assets (which are set forth in your Trust) to the successor trustee of your Trust (or the transfer of same immediately to your designated beneficiaries) is automatic.  In other words, no waiting.

2)   Money.  As a rule, lawyers will generally charge you more money to draw up a Trust than a Will.  Why? There’s a lot more paperwork to a Trust than a Will, a lot more….  However, the amount of money you’d have to spend probating a Will is, as a rule, a lot more than it costs to have a Trust drawn up.  So, although you’ll spend less money getting a Will done initially (as opposed to a Trust), the amount of money your family members will ultimately have to spend probating your Will (after you die) will more than make up for whatever you initially saved (when they ultimately have to hire a lawyer to probate your Will).  Accordingly, in the long run, Trusts are cheaper (and arguably do a much better job of setting forth and accomplishing your intentions after you die).

3)   Public Record.  One of the most sensitive issues associated with probating Wills is that, since probate=a court proceeding, all the information related to a probate is of “public record.”  This means that, if someone wanted to search through court house records, they could find out how much you are/were worth, how much of it was distributed, and to whom.  Pretty scary stuff….

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Trust Tips

Last Updated on Thursday, 14 July 2011 04:04 Written by Chris Griswold Friday, 1 January 2010 08:39

I confess.  I took advantage of all the blizzard snow by sledding down some large hills with my son Troy (just like Clark W. Griswold did in the well known Christmas Vacation movie). Hopefully, some of you got a chance to do likewise….  This time of year, a lot of people are cleaning up clutter and making resolutions for the New Year.  As an attorney, this “new-leaf” activity equates to people calling in to either create a trust or to look over one that has previously been created (just to keep it up to date).  Accordingly, I want to pass along some important information about some common errors and omissions that I routinely observe when reviewing peoples’ trusts.

Trust Tips

If you’ve already formed up a trust or are thinking about having one created in the near future, be sure to watch out for the following:

Cars. A lot of people like to routinely put their cars, trucks, boats, recreational vehicles, etc… into their trusts.  Why?  Unless it’s some type of a collectible or a family heirloom piece, I really don’t know….  If you get into an accident with the vehicle and you’re determined to be at fault for causing the accident, the fact that the vehicle is titled in the very name of your trust doesn’t help with preserving the wealth you’ve amassed and placed into your trust.  True, you might lose a lot of money whether or not the vehicle is titled in the name of your trust.  However, it’s less than ideal to patently integrate such a huge liability into the fabric of what is supposed to be a wealth preservation tool.

IRA’s, Pensions, Annuities, Life Insurance Policies, etc. A good number of people actually transfer these tax deferred investment vehicles into their trusts.  While sometimes beneficial, oftentimes it’s not.  Why?  Transferring the tax deferred investment vehicle into the trust is actually a “trigger” to a “taxable event” which carries with it adverse tax consequences.  Rather than transferring these investments into the name of the trust, you should instead change the designated beneficiary(ies) on these vehicles to the name of the trust.

Follow Through. It’s great to create a trust, but, does it really accomplish anything?  Many people have paid good money for their trust just to find out they haven’t really done anything.  Remember, a trust is effective only if it (among other things) both: i) has your stuff in it, and ii) legally exists with the relevant authorities.  For example, if you own real estate and desire for that real estate to be held in the name of your trust, you have to: a) deed the real estate into the trust (not just name the real estate in your trust agreement), and b) file the existence of your trust with the relevant authorities.  Don’t be a Clark W. Griswold when it comes to your trust…. Happy New Year!

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