As estate planning attorneys, a new client will sometimes come to us looking for solutions. In these cases, a loved one passed away, and a very difficult situation was left behind. The surviving family members are wondering if anything can be done to control the damage.
In some cases, there are certain things that can be done, but it will depend upon the circumstances. Of course, with anything, if you take the right steps in advance you can prevent future problems.
Trust attorneys help people who want to make sure that their loved ones are provided for appropriately, and they also address the trust administration process.
Why would use a trust instead of a will? This is a good question, and the answer is multifaceted. The best way to understand it from an overview is that a will facilitates direct asset transfers to the inheritors. After final debts are paid and the estate is probated by the court, lump sums are distributed.
The people who inherit the assets can then go forward in direct possession of the assets that they inherited. This can be suitable under simple circumstances, but in other cases, this scenario would be less than ideal.
For example, what if someone who is receiving a direct inheritance is in a lot of debt. Once the assets are directly in the possession of the indebted family member, anyone who holds a judgment against this individual could attach the resources.
Even if a person is not in debt when he or she receives an inheritance, the inheritor may not see the big picture due to immaturity. Sometimes, when people receive a windfall that seems like a lot of money to them when they are younger, they buy things that are really unnecessary and inappropriate.
Before long, they have accumulated a lot of junk, but there is nothing there that is of substance, and there are no resources to draw from in the future.
Another thing about a will that a trust attorney would explain to you is the fact that the probate process is a public proceeding. The general public can access probate records at any time, and they can find out how assets were distributed. Access to this information can cause problems within families that linger for years after the death of the decedent.
Trust attorneys offer solutions when clients explain their objectives. For example, if you are concerned about the money management capabilities of a loved one, you could establish a revocable living trust. You could act as the trustee while you are living, and you could also act as the initial beneficiary.
The person that you want to provide for after your passing would be the second beneficiary, and you would name a successor trustee to administer the trust after you are gone. You would not be required to instruct the trustee to distribute everything to the beneficiary all at once.
The successor trustee could distribute assets over time, and the resources would be managed by a person or entity that you have complete faith in. Many people use a corporate trustee like a trust company, and this can provide a host of benefits.
This type of trust would be revocable while you are living, so you could dissolve the trust and take back the assets if you want to. Because you are retaining incidents of ownership, the assets would not be protected from your creditors.
However, you could add a spendthrift provision. After you pass away, the trust would become irrevocable, and the principal would not be accessible to the beneficiary’s creditors, so there would be asset protection. Though mandated distributions to the beneficiary could be attached by creditors, certain verbiage could be included in the trust declaration that would allow for safe distributions for maintenance purposes.
Trust attorneys can help people who want to protect spendthrift heirs, but there are other reasons why you may want to utilize a trust. You should explore all of your options and make fully informed decisions so that you can be certain that your assets are transferred to each person that you love in the ideal manner.
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Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.