Episode 7: The Benefits of a Trust for End-of-Life Planning
Jan 16, 2024
Honey and Santiago are talking with attorney and estate planning expert Shawn McCammon. Today’s essential question: How do I know if a trust is right for me and what type should I be considering?
This is part two of their estate planning trilogy to explain things in terms that we can all understand.
A living trust serves as a versatile tool, akin to a Swiss army knife, in estate planning. The primary benefit of a living trust is its role in avoiding probate, the default court process for handling estates.
By placing assets in the trust, individuals can sidestep the probate court, ensuring a more private, streamlined, and cost-effective distribution of assets to heirs. Additionally, a living trust establishes a legal obligation for the trustee, such as a family member or trusted advisor, to manage and use the assets for the individual's care during any period of incapacity, offering protection.
Are all trusts the same?
Shawn distinguishes between two main types of trusts: revocable living trusts, which are flexible and can be amended over time, and irrevocable trusts, which are less flexible and may be set up for specific purposes like tax planning, charitable trust planning, or special needs trust planning. For most clients, a revocable living trust is the preferred choice.
Santiago and Honey share from their personal experience emphasizing the importance of simplicity and ease in estate planning. If something happens to your spouse, that is not the time you want to be answering legal questions or making big decisions. Doing it ahead of time makes things much easier on everyone.
Shawn also addresses the funding aspect of trusts, highlighting the significance of ensuring that assets are properly transferred into the trust to avoid probate issues. This isn’t complicated as Santiago shared, in some cases it’s as simple as signing some new paperwork at your bank, but it’s a step that you don’t want to skip.
The conversation shifts to considerations for small business owners in estate planning. Shawn advises involving the next generation in the business early on to increase the likelihood of a successful transition. He also recommends legal structures like LLCs or corporations to facilitate minority ownership for family members.
They also discuss the role of Medicaid planning and trusts in managing assets, qualifying for Medicaid, and protecting assets from recovery. Elder law attorneys, specializing in Medicaid planning, are recommended for assistance in navigating the complex rules and tools involved.
How much does it cost to create a trust?
Prices will vary depending on the complexity of your estate. Shawn explains his approach which is to have a consultation to determine the scope and then he provides his clients a flat fee for the trust preparation and any assistance filing documents to fund the trust as well. Finding an attorney who specializes in trusts is more likely to handle the process this way instead of hourly billing.
Trusts are not just for super wealthy people. It’s a way to plan ahead, protecting your assets, making sure you are cared for, and your heirs are not left with a complicated legal process.
As always, this is not meant to be legal advice, but information to help you make personal decisions about the steps you want to take regarding your end of life planning.
