Trusts are great tools for privacy and protection

People like to use “trusts” to preserve their privacy, and keep assets in their family, sometimes for multiple generations.

A trust is an agreement wherethere is a trustee, a beneficiary and trust property. The trustee has to use the property as the trust directs for the beneficiary.

At the inception, the trusts are usually revocable and the person who creates it is the trustmaker, trustee, and the beneficiary. They retain the right to amend and revoke the trust. The trust is an alter ego of them and while they are alive, it is their social security number. What are the benefits?

First Benefit: Privacy is the initial benefit. Property in the trust or payable to the trust does not go through probate. In other words, the court does not need to be involved. In the event f disability or death, this preserves privacy and minimizes administrative costs.

The successor trustee (usually a spouse or adult child) will be responsible to follow trust instructions. There is still accountability. But the court usually does not need to be involved.

Second Benefit: The next benefit is keeping your assets in your family.

For example, when a loved one (eg an adult child inherits), we often direct their share into a trust for their benefit.

When this is done properly, they can have full use and benefit of the funds, but they can be protected from lawsuits (divorces) and guaranteed to stay in your family as you direct. This is very valuable for those who wish to make sure their assets stay in their family.

Most people want to do this.

Example: Max and Jane have one son, Kevin, who is married to Ginny. Kevin and Ginny have one child, Josephine.

Max and Jane want to make sure their assets will go to Kevin and avoid unnecessary court involvement. They also want to make sure the inheritance Kevin gets will be protected from divorce, and other lawsuits, and when he passes, the remaining assets will stay in the bloodline and benefit Josephine.

What should they do?

They will create revocable trusts and direct when Kevin inherits, his share will go into a trust for his benefit, and Josephine will have a remainder interest. It is as simple as that. These instructions need to be carefully laid out and assets need to be optimally titled. But, with a little planning, these privacy and asset protection goals can easily be accomplished

Mark F. Winn, Master of Laws (LL.M.) in Estate Planning, a local asset protection, estate planning and elder law attorney. www.mwinnesq.com