It is a common misconception that only the rich and powerful have trusts. In reality, many different types of people do. (We actually use trusts in about 95% of the estate plans we create!) We frequently suggest trusts because they safeguard the money you leave for your loved ones.
So, what exactly is a trust? A trust is a legal structure that you set up to manage your assets. In the context of estate planning, they are often used to control and distribute your assets after you pass away, although sometimes they are used to control your assets while you are alive. When you create a trust, you will define the distribution terms for your beneficiaries of your trust, and you will also name the trustee. This person will carry out your intentions regarding the trust property and will manage those assets when you pass away.
For help drafting a trust, contact the Dublin, OH trust lawyers at DuPont Law Group. Our estate planning attorneys could help you ensure your assets are managed the way you want them to be after your death.
4 Reasons You Should Consider a Trust
Even if you already have a will, drafting a trust with the help of an experienced Dublin, OH attorney can be a great addition to your estate plan. A trust offers many protections and benefits that a will does not.
For example, a trust can help you avoid the lengthy, costly, and public probate process. In a will-based estate plan, going through the probate process is required. Probate is the legal process of transferring assets from the estate of a person who has died to their beneficiaries (those persons named in their will to receive their assets, or those who are defined as heirs by the laws of the State). Going through probate court makes the nature of your assets, your debts, and your wishes a public record. A trust can protect your family’s privacy and eliminate the costs of probate.
A trust also offers protection from creditors. Going through the probate process leaves your assets exposed to creditors. A trust prevents that from happening. If you’re concerned about accumulating a lot of medical bills in your last years of life, a trust may be a good option.
In addition, a trust can help you avoid income and estate taxes. Many Ohioans fail to recognize the amount of tax that can be taken out of their estate when they pass away. There is potentially income tax on your retirement accounts, capital gains tax on the value of your real estate, investments, etc. Throw in your bank accounts and, in some circumstances, your life insurance, and it can add up to a lot. In some instances, a carefully crafted estate plan involving certain types of trusts can reduce and potentially eliminate taxes. Without proper tax planning, as much as 40% of your assets could be taken by the government when you die, leaving little for your beneficiaries.
A trust also protects the funds you leave for your children. Trusts are especially important when you want to pass funds down to minor children. If you rely solely on a will, the guardian of your minor children will need court approval for expenditures until your child turns 18. This can cause unfortunate delays and costs. As importantly, if the funds are left to your child in a guardianship, the funds will become theirs at the age of 18. Leaving those funds to your child in a trust allows you to direct that those funds do not get turned over to their ownership until later in life, at an age or time that you choose. This allows for greater protection from their mismanagement of the assets and protection from potential exposure to loss in a divorce.
How Do I Pick a Trustee?
One of the most important decisions you will make when creating a trust is who to name as trustee. The trustee is responsible for overseeing the trust, making sure that the terms of the trust are followed, and distributing the assets to the beneficiaries.
Many people select a trusted family member or friend to be their trustee. This person should have a similar belief structure to you regarding how assets should be managed and the exercise of discretion in making distributions to the beneficiaries. You can also appoint a professional trustee. A professional trustee is someone who has experience managing trusts and can handle the administrative responsibilities associated with them. This can be especially helpful if you live far away from your beneficiaries or if you are concerned about family conflict. During an initial consultation, a wills attorney in Dublin, OH could provide additional information to help you choose a trustee.
Do I Need a Lawyer to Create a Trust?
While it is possible to create a trust on your own, you risk using incorrect legal jargon and leaving your wishes unclear. When that happens, it can lead to family disputes, which can ultimately culminate in a lengthy and costly legal battle. There are many different types of trusts and many complex legal rules that apply to them. It’s always best to have an experienced lawyer help you. The trust attorneys at DuPont Law Group in Dublin, OH can help you choose the right type of trust for your needs, draft the trust according to the law, and help you name a trustee.
Speak with a Lawyer in Dublin, OH About Your Trust
If you would like more information on trusts and their uses in estate planning, please call our law office at 614-389-9711. Our Dublin, OH trust lawyers would be happy to answer any of your questions and help you get started on creating a trust that is right for you and your family.
How does a trust fit in with the rest of your estate plan? Check out our Consumer’s Guide to Estate Planning in Ohio here.
Greg DuPont, JD, CFP®, is a well-respected estate attorney, financial advisor, public speaker, and published author. He centers his multiple businesses around education, guidance, and relationship-building. This comprehensive combination gives him, and his team, the opportunity to effectively serve both individuals and their families. He is a life-long resident of Central Ohio and spends the majority of his time with his wife, Julia, and daughter, Sophie.
