By: Samantha K. Wolfe, Esquire, LL.M.
Like so many things in life, I think trusts are misunderstood. Are they a nebulous concept which can be difficult to understand? Sure. Do they take thought and planning? Sure. Are people confused about how to properly draft a trust? Sure. People tend to only see the negative side when it comes to trusts. Trusts can be complicated and tricky but they are so much more than that too.
Talking about a trust is like talking about a car. There are lots of different types of trusts so saying you have a trust is like saying you have a car. It really doesn’t tell you much.
I grew up on a farm so when I decided to go off to the big city for school, my dad decided I needed to buy a new car since I would be driving in a lot of traffic. Dad and I went car shopping together. Honestly, I don’t know much about cars but there are certain features I thought I needed in my new vehicle, and as I’m sure you guessed, the things I thought I needed were not the things my dad thought I needed. For example, I always thought sun roofs were really cool so I needed a sun roof in my new car. On the other hand, my dad could not have cared less about the sun roof. He thought I needed something really practical like 4-wheel drive. I needed a good stereo system. My dad thought I needed power locks with a feature that triggered the car 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 needed heated leather seats. My dad thought I needed airbags.
Needless to say, I have a 4-wheel drive vehicle, with power locks. I did get the heated seats though.
What I learned from the 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 with a trust the process becomes much easier.
When I meet with clients there are some common goals that clients mention: (1) providing for an individual with special needs, (2) wealth protection planning, (3) asset preservation and creditor protection, (4) creating a lasting legacy, or (5) federal tax planning. Some individuals may use trusts to accomplish several of these goals. Sometimes multiple trusts are used to achieve all the client’s goals or one trust alone is sufficient to achieve the goals.
A properly drafted trust should achieve your goals and offer you the most flexibility possible. Despite what people think, trusts offer flexibility, predictability, and can be very simple.
As I told you earlier, I ultimately bought a vehicle that included all the features my dad thought I needed. I couldn’t be happier. As I said previously I know nothing about cars but my dad does. He is comfortable around cars. He routinely fixes cars and is always tinkering with vehicles of all shapes and sizes. I think that is the key. If you don’t know much about something, then find someone who is comfortable with that something and ask their advice. If you want to provide for an individual with special needs, achieve wealth protection planning, have your assets protected from creditors, create a lasting legacy, or minimize taxes, a trust may be your best option so find an attorney that is comfortable with trusts. You will probably end up more satisfied and less confused.
If you asked me today if the color of my car is important I would tell you it is not. What is important about a 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 the car isn’t going to help; Dad was right, I needed the 4-wheel drive.