Elder Law Report
Elder Law Report
Trust Planning 101: What are Trusts, Who Needs Them, and Why?
What exactly is a trust, and do you really need one? Attorneys Haley Matson and Jane Dearwester tackle these questions head-on in our latest episode, breaking down complex legal concepts into practical, actionable information.
Think of a trust as a private container for your assets with specific instructions attached. Unlike the common misconception that trusts are exclusively for the wealthy, they serve numerous practical purposes for everyday people. Single parents protecting inheritances for minor children, individuals with disabled family members, business owners safeguarding their enterprises, and property owners with real estate in multiple states all benefit significantly from trust planning.
We explore how trusts offer superior asset protection compared to traditional wills, helping shield your hard-earned resources from creditors and providing controlled distribution to beneficiaries. For those concerned about potential long-term care needs, specialized trusts can help preserve assets while qualifying for government benefits. Most importantly, trusts give you remarkable control over your legacy - allowing you to specify not just who receives your assets, but how and when they receive them.
Not everyone needs a trust, and that's okay too. The key is understanding your unique situation and planning accordingly. Whether you're concerned about protecting minor children, managing complex assets, or simply want to avoid probate, this episode provides the foundational knowledge you need to make informed decisions about your estate planning. Ready to take the next step in securing your legacy? Visit our offices in Charlotte, Hendersonville, or Shelby for a personalized consultation.
Hello everybody, welcome to Elder Law Report. I'm attorney Haley Matson and I'm here with attorney Jane Dearwester. Hi there, and today we're going to talk about trusts. What are they, who needs them and why should you get them? So we're going to start off first with what is a trust. So, at the very basics, it's going to be a private written document that sets up kind of a bucket for you to title assets into and then provide instructions on where those assets go.
Jane Dearwester:Yeah, very simply put, and I think that's great. I think an important thing to remember about trusts again, the importance that they are a private document that you kind of get to hold close to the chest and, like with all estate planning documents, it can be changed right, because it's words on paper. So we can set up your trust initially and as things change, as they inevitably do over the span of your lifetime, you can do amendments. You can start over from scratch, but most of the time, once we set a trust up, as things change we can really just do trust amendments to do the changes over time. So, yeah, perfect.
Jane Dearwester:The second part is who needs a trust, and this is one I usually use myself as an example. I worked with Greg McIntyre to set up my trust last year because I'm a single parent, so the sole heir of my estate is a minor and can't leave real estate or other assets to minors, and so we set up a trust. My house is now in the trust. Now in the trust, the trust is now the beneficiary of my life insurance policy and even without, you know, minor heirs. There are other situations where people who have heirs in their family, who may be disabled or have special needs or really, if they have, maybe someone in their family with a shopping addiction or a drug addiction, unfortunately, that they don't want to just get a big sum of money, that they want the trustee to be more discretionary that is a great candidate for somebody who may need a trust. Additionally, someone who owns real property in multiple states, that's a good candidate for a trust because you can put all those properties into one trust to protect and manage those assets.
Jane Dearwester:Small business owners again great candidates for trust creation because you can actually put your business within the trust to further protect your business. And of course, what we see a lot and use trust to help our clients with is planning for long-term care. We may need to set up a Medicaid asset protection trust or an irrevocable trust to help our client or their loved ones qualify for that government benefit. And that's just a handful of examples, and of course there are others, but hopefully that gives you a little outline of who are the clients that we typically set up trust for. And then we've kind of got the why. I'll ping Paul back over to Haley, for why do we do trust? Sure.
Haley Matson:We do trust primarily for asset protection, so a lot of those who needs a trust are really also going to kind of be our why. Why would you need a trust for that asset protection? Like Jane said, if you have minor children and your money and what you want to give to your kids just goes through your estate, you're risking them getting a lump sum or having it be managed by a guardian maybe court appointed Whereas if you have it in a trust, then you've got a trustee who you know and trust, who can get it to those children when they need it. Additionally, if we're looking at, like long-term care, those Medicaid asset protection trusts that we were discussing, this is really an area where, without the trust, the assets are going to be out there and are going to be subject to different claims from Medicaid.
Jane Dearwester:Yeah, not to mention, trust creation provides a lot of tax advantages. Avoiding probate that's the big thing we were talking about before we got on here. That's a huge reason to put a trust in place to avoid your assets from going through a probate estate so they're not subject to creditor claims. Again, you can give very specific instructions within your trust, where you don't quite have the same level of flexibility in a will that you trust, because you can say who you want to have your assets in a will, but you don't have the discretion that you do in a trust for, as Haley said, a trust for, as Haley said, parceling out the money in insurance or focusing on higher education if you're a young person.
Jane Dearwester:So, yeah, I think, just understanding what trusts are, I think a lot of people have misconceptions about what a trust is. Some people I see it both ways. Some people think it's way more simple than it actually is and others think it's way more complicated. I can say from my experience I have people coming in who are resolute that they need a trust and once we sit down, talk with them, we've determined you don't really need one. If you want one, we'll draft one for you, but you don't really need one. So this is the reason to meet with a professional, to come into one of our offices either in Charlotte, where Haley is, hendersonville, where I am, or our other office over in Shelby to have a personalized, customized conversation about what's going to be best for you, and then the attorney you meet with will be able to make a recommendation and explain to you the who, what, why, why you need to trust, what kind of trust and how this is going to benefit you and your loved ones moving forward.
Haley Matson:Yes, yes.
Jane Dearwester:Great Well, I think that pretty much wraps it up for the basic Trust 101. And like we look forward to seeing y'all come into our office to ask some more specific questions, and we will see you on our next Elder Law Report.
Haley Matson:Sounds good. Thank you, Jane Cheers.