What is a Trust? By: Samantha K. Wolfe, Esquire, LL.M. in Taxation

Like so many things in life, trusts get a bad name because they are misunderstood.
Is a trust a nebulous concept which can be difficult to understand? Sure.
Does the creation of a trust take thought and planning? Sure.
Are some people confused about how to properly draft a trust? Sure.
Talking about a trust is like talking about a car. There many different types of trusts so saying that you have a trust is like saying that you have a car. It really doesn’t tell a person much.
I grew up on a farm, and when I decided to go off to the big city for college, my dad decided I needed to buy a reliable car. Dad and I went car shopping together. Honestly, I didn’t know much about cars but there were certain features I thought I needed in my new vehicle, and as I’m sure you guessed, the things I thought I needed where not the things my dad thought I needed. For example, I always thought a sun roof would be really cool so I wanted a sun roof in my new car. On the other hand, my dad couldn’t have cared less about the sun roof. He thought I needed something really practical like 4-wheel drive. I thought I needed a good stereo system. My dad thought I needed power locks with a feature that triggered the car doors to lock when I started the car. I thought I needed a pretty color for my new car. My dad thought I needed a car that sat high enough off the ground that when driving in heavy traffic I could hold my own against the big tractor trailers. I despise sitting on cold car seats so I thought I needed heated leather seats. My dad thought I needed airbags.
Needless to say, I have a 4-wheel drive SUV with power locks . . . although I did get the heated seats.
What I have learned since my car shopping experience with my dad is that like buying a car, establishing a trust is specific to a person’s goals. Once you decide what you want to accomplish in buying the vehicle or establishing the trust, the process becomes much easier.
When I meet with clients, there are some common goals that clients mention: (1) protecting assets from creditors, (2) planning for long-term care, (3) creating a lasting legacy, (4) minimizing federal estate and income taxes, (5) planning for retirement, and/or (6) providing for a person who has special needs. Sometimes multiple trusts are used to achieve the client’s goals or one trust is used to achieve all of the goals.
A trust if properly drafted should achieve all of your objectives and offer you the most flexibility possible. Despite what people think, trusts can offer simplicity, flexibility, and predictability.
As I mentioned, I ultimately bought a vehicle that included all of the features my dad thought I needed, and I couldn’t have been happier with my investment. As I said, I know nothing about cars; however, my dad does. He is comfortable around cars. He routinely fixes cars and is constantly tinkering with vehicles of all shapes and sizes. That is the key . . . If you don’t know much about something, then find someone who does and ask that person’s advice. If you want to protect your assets from creditors and long-term care costs, create a lasting legacy, minimize taxes, and/or provide for a person who has special needs, a trust may be your best option so talk with an attorney that is comfortable with and knowledgeable about trusts. You will be less confused and more satisfied.
​If you asked me today if the color of my car is important, I would tell you that it is not. What is important about my car is that it gets me where I need to go; after all, that’s why I bought the car. When winter comes and I need to go somewhere, the color of my car isn’t what gets me there. My dad was right; I need the 4-wheel drive to get me where I want and need to be.

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