More Trust News
If you've been even an intermittent reader here, you know I've proclaimed the helpful uses of trusts on many occasions. Historically, the primary goal was to save federal estate taxes; however, the exemptions from tax are now so generous ($5,340,000 per person this year) that only the most fortunate of us - and I use the communal plural hypothetically - has any continuing concern on that front. If you're still in that boat, there are steps to take, but I won't go there in this column.
Probate avoidance is the big trust motivator these days, largely because all the New Hampshire courts are so short-handed and backed up that they don't have time for cold beverages, much less for handling probated estates in a timely or economical manner.
Still, that's not the point of this message. It's this: Many of us also need trusts to provide wisely for a loved one with special needs - and I use that phrase broadly.
We might have a child, grandchild or sibling who suffers chronically with a mental or psychological challenge that entitles them to public benefits of various kinds. If we leave assets outright to them, not only may they be incapable of protecting those resources on their own, but they may unnecessarily lose their benefit eligibility.
Likewise, we may have a family member who's struggled on, off, and on again, with alcohol or drug dependence and may not make wise choices if presented with an inheritance that has no safeguards in place. And then there's simply the one who just can't seem to hold onto a dollar no matter what, and would turn a generous bequest into a significant liability before the check had cleared.
All of these folks may be wonderful human beings, and it's because they're family that we want to do our best for them. That's where a trust can make a real difference. It can designate a capable and reliable relative (or a third-party advisor) to oversee their share of your benevolence and to use it wisely for their benefit - so it lasts as long as they need it. That is, the trustee might decide to free up funds for the reliable, late model Honda but not for the 50th anniversary, limited edition, Mustang convertible - or might decline a loan of $5,000 to our loved one's neighbor who has no ability ever to repay it - or might simply use the trust funds in a manner that won't upset the public benefit applecart for the disabled recipient.
Keep in mind, too, that these special provisions can often be included in a trust that's already being aimed at probate avoidance, so there may be multiple birds we can attend to in the same document.
Sure, our family member may initially bristle at being singled out for special treatment, but that's where either a candid sit-down with him or her can help, or a heart-felt letter of explanation left with the trustee can make the case once we're gone. Many times I've gladly taken responsibility for suggesting this careful course of action. No matter how it's orchestrated, what we need to get across is that it's because we do care that we're making these arrangements.
Posted 07/24/2014 Estate Planning
Probate avoidance is the big trust motivator these days, largely because all the New Hampshire courts are so short-handed and backed up that they don't have time for cold beverages, much less for handling probated estates in a timely or economical manner.
Still, that's not the point of this message. It's this: Many of us also need trusts to provide wisely for a loved one with special needs - and I use that phrase broadly.
We might have a child, grandchild or sibling who suffers chronically with a mental or psychological challenge that entitles them to public benefits of various kinds. If we leave assets outright to them, not only may they be incapable of protecting those resources on their own, but they may unnecessarily lose their benefit eligibility.
Likewise, we may have a family member who's struggled on, off, and on again, with alcohol or drug dependence and may not make wise choices if presented with an inheritance that has no safeguards in place. And then there's simply the one who just can't seem to hold onto a dollar no matter what, and would turn a generous bequest into a significant liability before the check had cleared.
All of these folks may be wonderful human beings, and it's because they're family that we want to do our best for them. That's where a trust can make a real difference. It can designate a capable and reliable relative (or a third-party advisor) to oversee their share of your benevolence and to use it wisely for their benefit - so it lasts as long as they need it. That is, the trustee might decide to free up funds for the reliable, late model Honda but not for the 50th anniversary, limited edition, Mustang convertible - or might decline a loan of $5,000 to our loved one's neighbor who has no ability ever to repay it - or might simply use the trust funds in a manner that won't upset the public benefit applecart for the disabled recipient.
Keep in mind, too, that these special provisions can often be included in a trust that's already being aimed at probate avoidance, so there may be multiple birds we can attend to in the same document.
Sure, our family member may initially bristle at being singled out for special treatment, but that's where either a candid sit-down with him or her can help, or a heart-felt letter of explanation left with the trustee can make the case once we're gone. Many times I've gladly taken responsibility for suggesting this careful course of action. No matter how it's orchestrated, what we need to get across is that it's because we do care that we're making these arrangements.
Posted 07/24/2014 Estate Planning
