August 30, 2013 - Posted by: admin - In category:

taxes - No Responses

Short and sweet is good with many things, but when it comes to the world of an estate planning, particularly with regard to your living trust, this approach is not recommended.

One of the main purposes of a trust is to anticipate, plan and protect against potential issues that might arise during life and after death, such as disability, remarriage, divorce, etc.. These must be anticipated for you personally, your spouse, your children and/or any other beneficiary under your trust. Likewise, since the applicable laws are frequently changed, a trust must contain flexibility and a mechanism for updates and amendments to comply with applicable law. Further, a trust should give very specific powers and directions to the trustee, but in addition to specifics, a trust should also contain broad and sweeping instructions, again, to enable a trustee to act in the midst of just about any possible situation. Not all assets can or should be treated the same way under a trust–in fact, applicable law requires that some assets be treated differently than other. For example, qualified retirement plans requires such “special” treatment. There are many other considerations and ingredients to a proper trust document and to summarize, there is no way to build in all of the necessary and proper elements of a trust, while keeping the length of said document to just a few pages.

To use an analogy, imagine a situation where you were headed out on a wilderness trek, not knowing how long you would be gone or what you would encounter along the way. Prior to leaving on the journey, you are offered the choice of two bags that you can take along on your journey. One bag is very small and contains only a flashlight, some water and enough food for 2 days. The other bag is quite large and heavy and you learn that this bag contains everything a person could possibly need for a stay of 10 months in the most harsh environment. You will not be required to carry either bag–you just have to decide which one to take with you. Pretty easy choice, right? Small and simple is good at times, but this is NOT one of those times.

Trusts are often intended to protect you from whatever the future may hold and since none of us really knows what will come down the road tomorrow, the next day or any day after that, it is wise to have a trust agreement that plans for and protects against every possible scenario. This means that a good trust will be several pages long. The good news is that we don’t expect you to memorize every word of your trust and we promise not to quiz you on its contents. Rather, it is our job as your qualified estate planning specialist to write, understand and maintain your trust. That is what we do and we’re pretty darn good at it, if we do say so ourselves…:)

To analogize, very few of us understand all of the wires, whistles, bells and sensors which are contained in our cars (unless you happen to be an auto mechanic).  Indeed, most of the cars now require computer diagnostic equipment in order to fully analyze and provide answers with regard a potential problem.  Even so, we are grateful for the many different safety features and modern comforts which our cars provide us (though we don’t understand what we see when we lift up the hood or pull back the instrument panel cover).  In short, even though we don’t know exactly HOW it works, we are glad and grateful that it DOES work and we are much more safe and comfortable as a result.  The sample principles apply with regard to your estate planning papers.  Even though they are words on pages, you should NOT expect to fully understand or appreciate exactly how such words and pages establish an estate plan that will provided you with the needed benefits and protections over time.  Find a reputable estate planning attorney, ask all of your questions and give that attorney specific details as to what type of estate plan he/she should design and implement for you.  Then, sit back and trust that you have chosen wisely in your choice of attorney and that he/she has done the job correctly.

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