The following is a list of questions to help determine if a Trust would be an effective tool to accomplish the desired objective. This list is not exhaustive. Trusts can be created for a variety of other purposes. In order to determine if a trust is indicated for you and your particular concern, contact the office of John C. Grundy to discuss your situation.
1. GOAL: To Avoid Probate
Value of assets potentially subject to probate administration exceeds $100,000[1]. “$100,000″ is an approximate break-even point. The greater the value of assets subject to probate administration, the greater value a trust presents. Placing assets in a trust will avoid probate administration of those assets at death.
2. GOAL: To create a plan for distribution of assets that cannot be changed
I want to be certain that my distribution plan cannot be changed after my death. This addresses concerns such as: my spouse/partner/significant other may change by distribution plan after my death and replace my intended beneficiary (e.g., my child) with someone else (e.g., my stepchildren); my spouse/partner/significant may remarry/establish a new relationship after my death and replace my children as successor beneficiaries with new spouse/significant other or that person’s children; my child may remarry/establish new relationship after my death and replace my grandchildren as my intended beneficiaries; my child may get divorced and I want to be sure to prohibit my child’s divorced spouse from getting any of the assets intended for my child. These examples are only a small sample of the reasons a person may be concerned about this.
3. GOAL: To provide a “base” for a spendthrift beneficiary
My beneficiary will spend through any assets I leave him/her and I want to protect my assets and my beneficiary from dissipating the assets as a spendthrift.
4. GOAL: To provide a “base” for a beneficiary who may not be able to provide for him/herself
I want to be certain that my beneficiary (who, for whatever reason, I have concerns about whether he/she will earn enough income to take care of him/herself) is provided with a “base” either a place to live, income, spending money, transportation, etc. Most often when a person talks to me about a beneficiary who has spendthrift issues, the underlying problem is one (or more) of three things: gambling, substance and/or alcohol abuse, and/ or problems with relationships.
5. GOAL: To provide resources for my special needs beneficiary
Beneficiaries with “special needs” either do, or may, qualify for SSI and/or Medicaid. These programs strictly limit income and assets an applicant may have and receive a benefit from that program. It is possible to create a trust to hold assets for the benefit of the special needs beneficiary without having trust assets counted as disqualifying resources that may stop the benefit currently received and/or give the program a claim for reimbursement.
6. GOAL: Adult concerned about payment for nursing home/assisted living
For adults concerned they may require long term care at some point in the future, it is possible to establish a particular kind of trust to shelter one’s own assets from being counted as available resources and so qualify for Medicaid payment of long term care costs. There are strict rules about this, including a 5-year look back period.
7. GOAL: Protect assets
For those who want to protect assets from the claims (or potential claims) of creditors or future creditors, specific kinds of trusts exist in Ohio which are effective asset protection tools.
8. GOAL: To hold assets for future distribution to a beneficiary
If my beneficiary is a minor, a trust can hold assets for that minor child with provisions to make distribution at a later date. (This avoids guardianship of those assets for that child.) I may also have a desire to fund post-secondary education, provide a down payment for a house, provide start-up capital to open a business or professional office, fund or supplement retirement etc.
9. GOAL: To manage my assets in one “basket”
Professional trustees provide expert administration and investment management services. A trust can be created to hold my assets in order to take advantage of this expertise.
10. GOAL: To avoid conflict; to avoid a Will Contest
If I am concerned that my beneficiaries will fight, or someone may contest my Will, a Trust offers a good way to avoid both. Beneficiaries and next-of-kin in a probate administration in Ohio are entitled to notice and hearing for almost every pleading filed in the probate case, which makes conflict easy to engage. A trust is not subject to contest as a Will is. Although a Trust can be challenged, it is very difficult to win a challenge to a Trust, and virtually impossible if the trust has been in existence very long and accounts which generate statements have been created in the trust.
11. GOAL: To address a contingency
Example: I want to leave my assets to beneficiary 1; but if beneficiary 1 is deceased then hold the assets in trust for future distribution to contingent beneficiary/ies.
12. GOAL: Eliminate or reduce estate taxes
My assets have a value large enough that I am concerned about estate taxes at my death, and I want to eliminate or reduce them. Certain kinds of trusts can address estate taxation concerns.
13. GOAL: Charitable Intent
I have some charities in mind to benefit when I die. There are trusts which can be effective tools to fulfill my charitable intent.
14. GOAL: “Life Estate”
Give Beneficiary 1 the use of the assets, or the income from the assets, during that beneficiary’s life, then distribute the remainder to Beneficiary 2 after Beneficiary 1 dies.
15. GOAL: Care for pet after my death
If I want to be sure that Cuddles or Fido are cared for after my death and I am willing to leave money for that purpose, a trust can be used to hold the money and direct what particular care my pet receives after my death.
[1]Assumes an attorney fee in probate administration of 4% of the value of assets subject to probate.