Author: Greg Aler

You’ve probably heard a lot about trusts, and you may be wondering, “Do I need one?”

It’s a simple, straightforward question, but there isn’t one magic answer. It depends on your goals for your estate and your family as you age and after you pass away. Let me explain.

First, what is a trust? It’s a legal document, yes, but think of it like a holding tank. A trust can own a car or your house. It can own bank accounts. It can hold—in the ownership sense—things much in the same way a person can. A trust does this as a benefit to you and your family.

Why would that make sense? You might be thinking, “Only if you’re rich with millions of dollars in assets,” but that’s not the case. Instead, think protection of assets; specifically, do you want to make sure certain assets you own are protected against long term care expenses, probate, or taxes? Do you want to have some level of control over the distribution your assets to the people you designate when you’re gone? For most people, the answer is a resounding yes.

Those are the big four reasons a trust make sense: long-term care, probate, taxes, and distributions. Let’s dive a little deeper on those, starting with long-term care.

There are certain types of trusts in which you can put assets like your home, family farm, or some CDs, and after a certain period of time, the nursing home cannot touch those assets. That’s huge considering that if you were to go into a nursing home facility, the cost could be upwards of $100,000 a year, which is a massive risk for many families. Naturally, you’d want to do what you can to protect against that, and a trust may be the answer.

The desire to avoid probate is another reason a trust could make sense. Assets owned by the trust circumvent probate. If you’ve ever been an executor or a beneficiary of a will, you know it could take six months or even years to finally get through the court system. Using a trust avoids the entire probate court process altogether. That’s a big reason a lot of people like to have a trust instead of just using their will. It saves time, headaches, fees, and costs.

The next reason a trust can make sense is that it can help reduce your tax burden. There are many ways trusts can be used to help you maximize your estate’s tax savings at the state or federal level. And let’s face it—nobody likes paying more taxes than they have to. This is an especially salient point when we consider that the estate tax can (and will) change over time. We don’t know what it will be in the future, which is why it can make sense to put some proactive protection in place now with a trust.

Which brings us to our final reason a trust could make sense: control over the distributions. It might not seem like a huge deal, but if you have young children or grandchildren, providing some guidance on how they would inherit money could position them for success in the future. Perhaps you’d like them to receive a third of their inheritance at age 25, then another third at 35, and so on, instead of getting everything at once. Otherwise, the alternative may be that they receive everything at age 18, at which point they have the greatest college experience of all time, and no money left to show for it. That’s probably not what you had in mind. A trust can help ensure that you’re able to help your loved ones in the way you intend to.

There you have it—four reasons a trust might make sense. The takeaway here is that trusts are not just for rich people, and frankly, they’re not that complicated if you have the right attorney. Our team would be happy to help guide you through the process. Just give us a call.

Finally, if you’re just joining us, don’t forget to check out the rest of our Estate Planning 101 series.

When it comes to important life events, creating or updating an estate plan tends to slip the mind. And in fairness—whether you’re moving, starting a new job, having a baby, or retiring—you probably have your hands full. Yet when we’re least likely to think about estate planning is usually when we need to most.  

So today, I want to talk about when it’s important to create or revisit your estate plan. Some of these you may already know, but I bet a couple will surprise you.  

Let’s start with the first one, which I’ll call… 

Save the Date #1: The First Job 

This one tends to be a surprise. You’re young, healthy, single, just out of college, and have few or no assets. For most twenty-somethings, estate planning isn’t even on the radar. But it’s important because this is a very mobile period of life—whether you’re moving frequently, traveling, or living far from family. As you’ll recall from the last installment of Estate Planning 101, an estate isn’t just about specifying how you want your assets divided; it’s also about how you want to be cared for in the event you’re unable to make those decisions yourself. So, if mom and dad get a call from the hospital about their twenty-something who lives away from home and needs medical care, an estate plan can help inform their decisions. 

However, there comes a time when you might want to take mom, dad, siblings, or friends off the estate plan, which brings me to our next save the date… 

Save the Date #2: Marriage 

Once you get married, you’ll likely want to update your estate plan (or create one if you haven’t yet) to reflect the role your spouse now plays in your life. At this stage, because you’re just starting to accumulate wealth, the important pieces are a health care power of attorney and financial power of attorney to guide how healthcare and financial decisions should be made. 

Then, as any parent will tell you, everything changes when you have kids. Which brings me to the next point… 

Save the Date #3: The Birth or Adoption of Children 

This is often what inspires young couples to develop an estate plan. But I advocate for starting it sooner, because, as we all well know, life is busy with young children. So, it can relieve some stress if you only need to update your estate plan upon the birth of your children, versus finding an attorney and starting from scratch. 

Either way, the important piece here is updating your documents to specify two things: 1) who should be responsible for the care of your children and 2) who should be responsible for the finances of your children in the event both you and your spouse pass away. These can be the same people, or they can be different. This tends to be a tough decision for parents, but the important thing to remember is that as your children grow, relationships change and family members move, so you may choose to update these designations again.  

And then—barring any major life changes like divorce or the death of a family member included in your estate plan—we can fast forward to our next save the date…  

Save the Date #4: Retirement 

At this stage, your children are older and perhaps they’re married with children of their own. You have more assets and you may want to reconfigure your estate plan to specify that more of your assets go to your children or grandchildren. That’s the type of update that tends to be on people’s minds at this stage.  

But another thing you need to contemplate is how you’re going to protect yourself against the cost of long-term care. Depending on your financial situation, your estate planning attorney might recommend an asset protection trust, which can ensure that you don’t lose everything—including your home—to nursing home costs. This is important to do now because it’s time-sensitive. Your assets must be in the trust for at least five years to be fully protected. 

Finally, that brings us to our last save the date…
 

Save the Date #5: The Golden Years 

Ten, twenty, thirty years out from retirement can be a long time and a lot can change between now and then. Your assets may be different. You might have moved. The family dynamic might have changed. Maybe you have more grandkids. Or perhaps your preferences for your healthcare power of attorney have changed. Either way, your 70s or 80s are a good time to update your estate plan to reflect those changes. 

So that’s it! Now you have your estate planning “save the dates.”  

The good news is establishing a relationship with an estate planning attorney ensures that you’ll have someone looking out for you through all of life’s seasons. So even if you forget any of these “save the dates,” you’ll have a trusted advisor to stay on top of important updates, making any changes as seamless as possible. 

Even if you don’t currently have an estate plan and are in the midst of a major life event, don’t be daunted by the process of creating one. Our practice is solely focused on estate planning and elder care law, so we’re able to make the process as streamlined and stress-free as possible. That way you can get the protection you and your family deserve, without missing a beat. 

If these save the dates have reminded you or a family member that it’s time to update or create an estate plan, let’s talk about how we can help. Click the Contact button at the top right of the web page to schedule a complimentary consultation to learn more. 

Finally, if you’re just joining us, don’t forget to check out the rest of our Estate Planning 101 series.

When your kids or grandkids get a new set of LEGOS, it always comes with instructions. Same with that assemble-it-yourself furniture from the big-box retailer (or at least, we hope it comes with intelligible instructions). But when it comes to living life, there are no instructions, even when we need them the most.

As an attorney, I’m often asked to explain what estate planning is. And while I could rattle off a bunch of terms like probate, taxes, powers of attorney, wills and trusts, that doesn’t tell you what estate planning really is. Estate planning is creating the instructions we and our families desperately need for some of life’s toughest moments. Just like when the LEGO tower gets knocked over, or the assemble-it-yourself furniture isn’t coming together the way it should, we need something to reference that tells us what to do. That’s what estate planning is. When life happens, or when things go wrong, an estate plan provides direction for your loved ones.

Let’s look at some real-life examples of what an estate plan would do. If you have minor children, an estate plan would give the courts specific direction on who should care for your kids and how they would be supported if, God forbid, both parents were killed in an accident.

What about later on in life? Let’s say you receive a medical diagnosis with an unfavorable prognosis or develop cognitive issues and can no longer care for yourself. Your estate plan would provide guidance on who should make your healthcare decisions and financial decisions. Having that information readily available is important so your family and friends can navigate the situation in the manner you would have wanted.

I know these examples aren’t comfortable to imagine, but I bring them up to illustrate that life is unexpected. As Benjamin Franklin said, “…in this world nothing can be said to be certain, except death and taxes.” We’re all going to experience both. And that’s precisely why we all need an estate plan—not just the wealthy or the elderly. When you pass away, your estate plan will guide whomever you appoint so they don’t have to make guesses in a stressful, terrible situation.

Which brings me to my final point: an estate plan provides more than just instructions; it also provides the peace of mind that your loved ones will know exactly what you’d want them to do next. It alleviates the pressure to interpret your wishes and reduces or eliminates frustration and confusion. We all know how we feel when the instructions are missing from the LEGO box, or the directions for the furniture assembly appear to be in another language. It’s miserable. And that’s just trying to put together stuff, not someone’s life. That’s why an estate plan is more than just a set of documents. When life is in pieces, an estate plan is what helps your loved ones put it all back together.

Ready to build your estate plan? We’ll make it easy to put the pieces together. Schedule a complimentary consultation with one of our attorneys. Call us at 614-612-1115.

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Finally, if you’re just joining us, don’t forget to check out the rest of our Estate Planning 101 series.