“In other words, family members who are not named to inherit anything in the will may still see the list of all of the assets. If you don’t want that result, you can avoid it by establishing a trust.”
Privacy is just one of the benefits of having a trust created as part of an estate plan. That’s because assets that are placed in a trust are no longer in the person’s name, and as a result do not need to go through probate when the person dies. An article from The Daily Sentinel asks, “When is a trust worth the cost and effort?“. The article explains why a trust can be so advantageous, even when the assets are not necessarily large.
Let’s say a person owns a piece of property. They can put the property in a trust by signing a deed that will transfer the title to the trust. That property is now owned by the trust and can only be transferred when the trustee signs a deed. Because the trust is the owner of the property, there’s no need to involve a court and file for probate when the original owner dies.
Establishing a trust is even more useful for those who own property in more than one state because, if, for example, you own property in three states, your executor will need to manage three probate processes.
Privacy is often a problem when estates pass from one generation to the next. In most states, heirs and family members must be notified that you have died and that your estate is being probated. The probate process often requires the executor, or personal representative, to create a list of assets that are shared with certain family members. When the will is probated, that information is available to the public through the courts.
Family members who were not included in the will but were close enough kin to be notified of your death and your assets may not respond well to being left out. This can create problems for the executor and heirs.
Having greater control over how and when assets are distributed is another benefit of using a trust rather than a will. Not all young adults are capable of managing large inheritances. With a trust, the inheritance can be distributed in portions: a third at age 28, a third at age 38, and a fourth at age 45, for instance. This kind of control is not always necessary, but when it is, a trust can provide the comfort of knowing that your children are less likely to be irresponsible about an inheritance.
There are other circumstances when a trust is necessary. If the family includes a member who has special needs and is receiving government benefits, an inheritance could make them ineligible for those benefits. In this circumstance, a special needs trust can be created within the trust to serve their needs.
Another type of trust growing in popularity is the pet trust. Check with a local estate planning lawyer to learn if your state allows this type of trust. A pet trust allows you to set aside a certain amount of money that is only to be used for your pet’s care by a person you name to be their caretaker. In many instances, any money left in the trust after the pet passes can be donated to a charitable organization, usually one that cares for animals.
Finally, trusts can be drafted that are permanent, called “irrevocable,” or that can be changed by the person who creates it, a “revocable” trust. Once an irrevocable trust is created, it usually cannot be changed. Trusts should be created with the help of an experienced estate planning attorney, who can help you determine whether you need a trust and, if so, what type of trust will best suit your needs.
Reference: The Daily Sentinel (Jan. 23, 2020) “When is a trust worth the cost and effort?”