Category Archives: Trust

The benefits of a trust in estate planning

As California residents address their estate planning options, the question of whether or not a trust is beneficial is common. The concept may seem extreme or inappropriate to those who don’t have a high net worth, but trusts may be equally beneficial to someone whose net worth is a minimum of $100,000 if certain additional conditions are true.

Real estate, businesses, and art collections may be best handled through trusts. A trust can also be beneficial for managing the manner in which payments are made after one’s death. For example, a trust might be structured to support a surviving spouse while leaving the majority of one’s estate to heirs after that individual dies. A trust might be structured to allow partial payments to heirs at various points in life such as reaching an age of majority or completing a college education. A trust is an excellent option for someone who wants to be able to support a surviving loved one who is disabled so that there isn’t an impact on that person’s eligibility for government assistance.

Tax implications associated with an inheritance can be significant, making a trust an option for limiting the tax consequences after an individual dies. Trusts can also minimize the cost and time that would otherwise be spent to deal with probate. Assets tend to be less vulnerable to creditors when included in a trust as well. It is important to note that in order to protect assets, they must be titled in the name of a trust.

Those who are unsure of whether trusts are appropriate may want to begin by formulating goals for the management and distribution of their estate upon their death. An estate planning attorney can be helpful in providing direction for the most appropriate options based on these goals.

Source: CNN Money, “Estate planning: Is a trust beneficial?“, December 02, 2014

Special needs trusts are not just for wealthy families

A special needs trust or supplemental care trust can help families make sure their children are cared for both while they are alive and even after they are no longer there to look out of them. Although specifics vary from state to state, in general, it cannot be used to cover basic living expenses, such as food, utilities or housing. It can be used to cover important “extras,” such as transportation, computer equipment and home health aids. A special needs trust can be especially valuable to the family in pricey areas like California.

A special needs trust is a way to secure funds for a child without endangering their entitlement to government benefits. In general, having assets of $2000 or more in the name of the child will disqualify them for government benefits. Having a trust allows families to set aside funds for the child’s sole benefit without putting any of it in their name.

A trust is an instrument that can be hard to understand. This is part of why trust planning should be started at an early stage in the child’s life. Another reason to start early is to allow for time to accumulate adequate assets. Few people are wealthy enough to fund a trust adequately overnight.

However, even people of relatively modest means can accumulate trust property over time. Here are some means to finance a trust that many people may have available to then even if they are not wealthy: Life insurance; government benefits, such as Social Security survivor benefits; savings; and gifts from friends and family. Having a trust to help cover a child’s needs can protect both the child and the rest of the family. In spite of their reputation, trusts are not just for the rich.

Source:, “The Special Needs Trust“, October 18, 2014

Lou Reed relied on written will to disperse $30 million estate

California residents who were fans of late musician Lou Reed may be interested to learn how the ‘Walk on the Wild Side” singer handled his estate planning. According to a report filed by one of the two co-executors of Reed’s estate, a 34-page will Reed drew up in April 2012 was all the estate planning he had done before he passed.

Because Reed relied on a will rather than a revocable living trust, the details of how Reed’s estate was divided has become public knowledge. While his $30 million estate was dispersed, Reed’s family members were required to go through probate court. The media quickly discovered that Reed’s wife was left with 75 percent of his estate and Reed’s sister was left with 25 percent of his estate.

In addition to becoming public, wills that have to go through probate court can result in added expenses and headaches for a deceased person’s surviving family members. If one family member objects to an aspect of the will, it’s relatively easy to challenge the will in probate court. A revocable living trust, however, will ensure that the contents of an estate are dispersed privately without every beneficiary knowing exactly who got what.

A person who would like the added privacy and security of a revocable living trust may wish to consult an estate planning attorney. The attorney could help design a revocable living trust that will ensure that the person’s estate is dispersed quickly and privately after he or she passes. While writing a comprehensive trust document, the attorney may also be able to help individuals to add detailed conditions and limitations to the dispersal of their assets.

Source: Forbes, “Lou Reed Walked On The Wild Side With His Estate Planning“, July 10, 2014