What is the most powerful tool in the estate planner’s toolbox?
The most powerful tool to provide for the private administration of your affairs is to have an agreement (a revocable living trust) in which you spell out that you can amend and revoke your trust, but that if you become disabled or pass on, your successor trustee (usually a spouse or a child) must follow your instructions.
The biggest benefit is that your instructions are private and your trust assets do not go through the expense and publicity of probate.
Furthermore, we usually direct assets into “trusts” for loved ones. If done properly, the assets left “in trust” can be protected from creditors’ claims, not subject to the federal estate tax, stay in your family, not go to your in-laws, and stay in your blood family.
If you use a will alone, there are likely to be substantial administrative steps that need to take place that are costly and time consuming.
What is necessary? The trust needs to properly articulate your wishes. Assets need to be optimally titled to accomplish the proper flow of your assets. Proper and updated beneficiary designations on your life insurance and retirement plans is necessary.
So, looking at all these things is necessary to make sure everything will work as intended. This is where it is smart to have an objective professional advisor (such as an attorney) who can help you make sure all is optimal, updated and in place.
Let us imagine that Felix and Francis are new to the Lowcountry from Ohio, and they have one child named Lacey. Lacey is married to James, and they have one child, Sammy.
Felix and Francis could place all their assets into a trust for Lacey, and when Lacey passes, the rest of her share in trust will go to Sammy in trust for his health and education until he turns age 30 (or 25, or 21).
They could also direct that James would be the trustee, but as trustee he could be required to report bi-annually to an independent third party of all receipts and disbursements from the trust. Or, alternatively, if Lacey had a sibling, the sibling could be the trustee if Felix did not trust James.
There are many possibilities and scenarios. Asset titling and designations need to be coordinated. That is why when you update or secure your planning, it is critical that you consider all of your options so that you make the best choice for your family, and for your peace of mind.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. mwinnesq.com